Universities: Bureaucracy

– in the House of Lords at 11:31 am on 24th November 2005.

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Photo of Lord Norton of Louth Lord Norton of Louth Conservative 11:31 am, 24th November 2005

rose to call attention to the impact of bureaucracy on universities; and to move for Papers.

My Lords, I declare an interest as a professor and head of a department at Hull University. I also note with pleasure that two of the speakers in the debate are graduates of the university.

This is not the first time that I have drawn attention to the impact of bureaucracy on universities. I did so in another balloted debate four years ago. On that occasion I drew attention to the burden of bureaucracy and the need for a light touch, as distinct from the lighter touch that had been promised. I very much welcome the fact that since that time there has been a lightening of the burden in some areas. However, the impact of bureaucracy remains, notably in its range, opportunity cost and how it is perceived by those who work in our universities.

The problem of bureaucracy in higher education derives from a plethora of bodies, known by a bewildering array of acronyms, and how they operate. We have HEFCE, the QAA, OFFA, the RAE, the HE Academy and, for research grants, the ESRC and other funding councils. The list is by no means exhaustive. The real burden of bureaucracy derives from their existence as discrete entities and their collective impact. They operate in a way that may be effective for their particular purposes, but not one that is efficient. Indeed, this has been conceded in the case of the QAA, leading to a significant change in the way in which the inspection regime operates.

The way in which these bodies operate as distinct entities not only generates a substantial collective burden but also builds in overlaps, the same data being required in different forms, as well as potential conflicts. The demands of one body may not always be compatible with those of another. They engage in a wide range of data gathering and the generation of regulations and guidance. As the Minister will be aware, students lost interest in Trotsky many years ago, but the concept of perpetual revolution appears to live on among those who run our education system. There is no steady state. The regulations and rules governing data collection appear to change with amazing regularity. It is difficult to keep up.

Regulation imposes a significant cost. The cost can be identified in money, morale and enterprise. I shall take each in turn. The total cost impact on institutions of higher education was estimated by PA Consulting in 2000 to amount to about £250 million. I drew attention to that figure in the debate in 2001. Changes since then, especially in the QAA regime, have produced a reduction, and the equivalent cost in 2004 was estimated at £211 million. This is welcome, but it does not go far enough. It is a lighter load, but still not a light one. As PA Consulting noted, the cost is equivalent to the annual income of two large universities.

Furthermore, the reduction in regulation has been offset by an increase of almost 60 per cent in regulation from other organisations and activities over the same period. The burden is excessive in relation to need. Universities UK, drawing on the work of the Better Regulation Task Force, has argued that higher education is a "low risk" sector in terms of accountability, and that the regulatory burden should reflect that fact. The cost is not only excessive but greater than the estimate suggests. There is the opportunity cost—the resources could be put to much more productive use—and there is the impact on recruitment and retention. The cost to universities is not only a regulatory burden but also in academic seepage.

That brings me to the cost in terms of morale. It is this which I wish to stress. The impact of regulation has to be put in the wider context of what is happening in our universities. Long gone are the days of academics having plenty of time to indulge in reflective research, take long holidays and be deemed low risk by insurance companies for actuarial purposes. As I argued in the previous debate, academics are underpaid, under-resourced and undervalued. Factor in a soul-destroying regulatory burden and you have the basis for a crisis in higher education. Academic pay has declined relative to that of comparable professional groups. It is estimated that within the past 20 years academic salaries have declined by 40 per cent compared with similar professions.

Student numbers have increased markedly in recent years but they have not been matched by a proportionate increase in the number of academic staff. The staff/student ratio in higher education has increased from 1:9 in 1980 to 1:21 in 2004. Over the past four years, according to figures calculated by the AUT, the ratio has been higher in universities than it has been in schools. The 2004 figure of 1:21 compares to a ratio across all UK schools of 1:19. Universities in this country are also in a worse position than universities in competitor OECD countries. And it is not just a case of there being more students but also more paperwork per student. What one might term the unit cost of paperwork has increased, paper trails now being all important.

In short, academics are expected to do more for less. They work long hours—the end of a semester does not mean the end of long working days—and they do so for relatively little reward. Why bother? There are better pay and opportunities elsewhere, with the result that it is proving increasingly difficult to recruit staff and to retain them. If we were not able to recruit staff from abroad—40 per cent of new lecturers now come from overseas—we would not be able to cope. One study last year found that in the preceding year 56 per cent of women and 44 per cent of men seriously considered leaving the academic profession. Workload pressures are having an effect on the health of those who have to carry an increasing burden. PA Consulting conceded that such behavioural costs are not quantifiable, but nevertheless represent "real" costs to the institutions.

Our universities now survive largely on the good will of academics and it is proving increasingly difficult to maintain that good will. The figures I have just cited show how fragile the situation is.

The third cost is in terms of enterprise. My fear is that the extent of regulation has a dulling effect on innovation and exploration. Regulation is in danger of generating greater uniformity as administrators and academics decide to play safe. I notice that a Written Answer in the other place last week revealed that, in 2004, universities received 1,573 pages of documents from HEFCE. Trying to keep up with all the material is a major exercise in itself, but my principal concern is with what all the documents require of universities. Rather than risk their funding, universities comply with what is expected of them, even if the requirements are burdensome and the methodology, at times, questionable.

There is also the impact on academic research. I draw on the words of the noble Baroness, Lady Greenfield, who has to be in a laboratory today and regrets she is unable to be with us. In an article in the latest issue of the AUT magazine, autLOOK, she writes,

"Many academics no longer feel they can do long-term research, or take risks by engaging in certain projects that may not garner RAE points through safe publications. They might well opt instead for short-term projects that translate more quickly into print. Research geared to publication is fine, it shows the worth of your work, but it doesn't necessarily shift paradigms".

The regulatory burden is not only onerous; it has a chilling effect on innovation and individuality. That has significant implications, not only for the recruitment and retention of staff, but also for our international competitiveness.

The problem is serious. The regulatory burden must be put in context. The problems faced by higher education have to be addressed holistically. Some reduction in the regulatory burden is necessary but not sufficient if we are to restore our universities to a position where they can compete with those in comparable countries.

What, then, has been done to address the issue? The problem of regulation has certainly been recognised with the creation of the Higher Education Regulation Review Group. It has recommended a concordat between the many regulators, to streamline quality assurance and data collection, as well as recommending more focused consultations. Universities UK, as the Minister knows, has recommended the adoption of various principles to govern regulation, working within the framework of institutional autonomy proposed by the noble Lord, Lord Dearing. The recommendations of Universities UK—especially those geared to what has been termed a "dipstick" approach—are designed to reduce the inefficiencies of the existing regime. As I said in opening, effectiveness is not synonymous with efficiency.

The good news, then, is that there is recognition of the problem, and that some steps have been taken to address it. We have seen some practical changes, primarily in respect of the QAA, but much rests on the extent to which the recommendations I referred to are implemented. That implementation must constitute phase one of several designed to address the impact of bureaucracy on our universities, and form part of the wider response to the problems I have delineated.

I therefore look to the Minister, in replying, to explain the Government's intentions to bring that about. Making clear that the work of the Higher Education Regulation Review Group will continue would be a welcome indication of intent, but we need to go way beyond that. Next year will provide new opportunities for universities in terms of funding. We need to ensure that the opportunity is not lost to address the fundamental issues that face universities and—the aspect I have sought to address—those who work within them.

It will be helpful to hear from the Minister what the Government plan to do to help reduce the regulatory burden on universities, and what incentives they wish to build into the system to ensure that we can recruit and retain the academics we need for our universities to remain at—or, rather, be restored to—the cutting edge of teaching and research. I beg to move for Papers.

Photo of Lord Giddens Lord Giddens Labour 11:44 am, 24th November 2005

My Lords, let me start by congratulating the noble Lord, Lord Norton of Louth, on initiating a debate on a topic so important to education in this country. I have to own up, with some pride, to being one of the graduates of the University of Hull to whom he referred. I state an elliptical interest, in so far as I was the director of the London School of Economics for a considerable period, and I still sustain some close connections with that much-loved organisation. At least it is much-loved by me—that might not apply to everyone else in the Chamber.

When one says "three cheers" for something, it is normally done at the end of an occasion, but I should like to do it this time at the beginning of my speech. First, let us hear it for universities in general. Vice-chancellors tend to be reserved and shy people—that is a joke, by the way—so they are not always best at propagating the importance of universities in our society, but it should be much more widely known. Universities are much more central to our society today than they were 20 or 30 years ago. That is partly for economic reasons. In the British economy today, only 12 per cent of the labour force work in manufacture, and less than 2 per cent of the labour force work in agriculture. That means that well over 80 per cent of the working population work in symbolic occupations or service occupations that demand a knowledge base. Universities are also important for their contribution to civility. We live in an increasingly cosmopolitan society, and universities can play a key role in fostering a more cosmopolitan spirit in our population as university expansion and higher education expansion continue.

Secondly, let us hear it for British universities. I agree with quite a lot of what the noble Lord said, but British universities have some remarkable achievements to their credit. When one reads the press, one thinks that there is all this trouble between British universities and other organisations and that they have not reformed themselves. That is not true. Most British universities have become much more dynamic than they were before. They have improved their systems of governance, and have much closer connections with business and the outside world than they had 20 or so years ago. I hesitate to give the example of the LSE, but when I got there the governance institution was made up of 100 people who formed the court of governance. That was not the most dynamic way to run an institution that has to deal with rapid changes, but we reformed that, and we now have a council of just over 20 people who supply much more dynamic direction to the university, and that has happened with most universities in the country. Moreover, if you look at the 50 top-performing universities in the world according to the Shanghai indices and other indices of the attainment of the elite universities around the world, you will see that the UK is the only country with a substantial number of universities in the top 50 apart from the United States. So why should we not say that British universities, whatever their problems, are pretty much a success story internationally?

Thirdly, which might be a bit more difficult, especially for the Benches opposite, what about a cheer for the Government? There are always going to be stresses and strains between any government and the university sector. Everyone in universities is always going to think that they do not get enough money from the government. In my opinion, this Government have changed the whole climate for universities from that which pertained under previous Conservative governments. They have put a lot more state money into universities. You can see that visibly in the improvements that campuses have made in many of their buildings; it is a very visible form of improvement. The Government have given large-scale support to science and technology, recognising that universities are at the cutting edge of dynamism in our society because they are at the cutting edge of technological and scientific innovation. Everyone will say that it is not enough money, but there have been significant sums that have made a substantial difference.

The Government took the right course—although it was not very popular among certain sectors of the university population—in asking students to contribute to the cost of their education, on the basis that that education supplies advantages that subsequently reap rewards in life for those who have studied at university. If you look at the difference between British universities and continental universities, continental universities mostly have not been able to take that step, and they are massively overcrowded. British universities are largely in a far better state than most universities in continental countries. Take La Sapienza in Rome where there are 120,000 students. I will bet that of that figure, 100,000 have never even seen a professor. Even in American universities undergraduates will hardly ever meet a professor. But in British universities they do, and our universities therefore have a lot to commend them. The point of the reforms that the Government made, and the reason—that I supported strongly—that they were not funded from general taxation, was that the revenue goes to universities. It therefore increases the autonomy of universities, as such a system of financing should.

Higher education is expanding across the world. There is a marked expansion of higher education in all the industrial countries, for the reasons I mentioned earlier. I fully support the Government's target of getting 50 per cent of the relevant population into universities as soon as possible. Several other countries have already surpassed this target. Look at what is happening in India and China, where they are making massive investments in higher education. They are no longer competing on low-grade goods; they are already competing on high-grade ones, including informational goods provided by highly trained university graduates who are working at a fraction of the wage paid in western countries. It is a significant challenge, to which the UK must respond by continuing to invest further in higher education. As higher education expands, all countries face problems of the relationship between autonomy, funding and regulation. Every country has to try and find an appropriate balance for this.

Everyone loves regulation. Many people want to see more regulation but they only want to see it for other people; they do not want to see it for themselves. I have listened to a lot of lectures by university professors who want more regulation for business, medicine and advertising. But if you suggest that they should have more regulation—just like people in business—they always say, "Well, we don't need to be regulated, we want to be autonomous".

One can infer from this that regulation probably only does some good when people do not like it. In other words, it must chafe a bit if it is going to work and the very fact that it chafes gives some indication that it is working. This is what has happened in British universities. When the RAE and the QAA were introduced they were not very popular. They are still not very popular with the majority of academic staff but it would be difficult to deny that their effects have in some part been beneficial.

I should not say this, but I used to teach at a provincial university in the centre of the country which shall remain unnamed. It was not Hull, which is not in the centre of the country. Some people here might remember Lucky Jim. Lucky Jim was not so far off the mark in the university in which I worked. I hope that no one is able to identify it. We used to get in for coffee at about a quarter to 11 in the morning and then we would sit around in the common room, waiting for the time for lunch. Then we would go and teach a couple of students until teatime. There would be an extended teatime in the senior common room and then many people would simply go off home again. You could not get away with that today and that is partly because of the impact of these regulatory regimes.

Look at the case of the LSE. It entered 97 per cent of its academic staff in the research assessment exercise. In other words, only 3 per cent are research-inactive. Several of them were not in fact research-inactive; we simply could not find a category in which to place them. It would be difficult to deny that these regulatory regimes, especially when they were introduced, positively affected the performance of and the standards of teaching in universities, whatever objections the people working in them might have had.

There is obviously a point at which a regulatory regime simply destroys what it is set up to achieve. It can destroy the very values which it is supposed to foster. That happened in universities, even though these regimes had a good impact. They became so cumbersome and consumed so much time that they destroyed a good part of what universities exist for. I completely agree with the noble Lord on this issue. That was part of a general set of mistakes made by government in introducing very heavy regulatory regimes in the NHS, in education and elsewhere, and I am pleased that the Government have started to pull back fairly radically from those.

In line with the tenor of the opening remarks of the noble Lord, Lord Norton of Louth, I think that there are things that we should support. First, we should welcome the fact that there has been this pull-back on the part of government and that there is an attempt to find a much more compatible regime for universities. Secondly, we should welcome the fact that the head of the QAA today stresses the so-called light touch. Certainly, since I started running a university, the QAA has altered its regime systematically. Initially it was awful but now it is much more effective.

There is a funny thing called the dipstick approach. It may not be a better metaphor than "light touch" because, first, it sounds rather dark and oily and, secondly, you always put a dipstick in the same place, although I take it that that is not the point of the dipstick approach. If I were running Universities UK, which fortunately I am not, I would find a better metaphor.

Thirdly, we should welcome the Higher Education Regulation Review Group, even though, as the noble Lord said, it sounds like something out of Kafka and an example of the very thing that it is supposed to put an end to. However, the group, chaired by Patricia Hodgson, has been extraordinarily effective. It has focused mainly on HEFCE rather than the other regulatory regimes. Today, many of the regulatory burdens on universities come from HEFCE as much as from the QAA or RAE, and that is where the Government should primarily be looking. What plans does the Minister have for further utilising, and indeed supporting, the work of the Higher Education Regulation Review Group?

Finally, although the noble Lord did not introduce this subject in his opening speech, I want to make some concluding comments about privatisation in universities. Many people link an attack on bureaucracy and regulation in British universities with a programme of privatisation, suggesting that a swathe of British universities should be privatised—and they look to the United States in doing so. But there is a cautionary tale here as many people do not understand what is going on in American universities. First, virtually all universities in the United States, including the most elite and the richest, depend on state money for their revenue. Top universities get a great deal of revenue from very generous federal grants, without which they could not manage to survive.

Secondly, the discussion in the United States on university education is interestingly different from that which takes place here, although it is one that I think we should be having here. It is about recovering the public purpose of universities. It is no good simply abandoning the state and being in hock to business. That causes just as much of a problem for the mission of a university as does being linked to the state. The ex-president of Harvard, Derek Bok, has just written an interesting book on this subject. He points out the problems for universities that come from too much of an attitude of privatisation and closeness to business.

Thirdly, and finally, virtually no universities in this country could privatise—at least, in the short term. Two-thirds of universities in the United States are state universities. They all have looked at privatisation and virtually all of them have come to the conclusion that they could not privatise. They could not replace the large amount of money that they get from their local states. The same is true of the LSE. It could not privatise in the short term. It has an endowment of only £30 million, which generates nothing in terms of income. It still gets more than £20 million from government. I see the LSE as being like a privately funded public institution.

That is why I say, in closing, that I would like the Government to consider what the public role of universities today should be. That role should cover some of the things that the Government are trying to do. One of the most disturbing things in the United States is the rapid fall in the proportion of students from poorer backgrounds who now enter higher education. We should be doing something about that here, and the Government are trying to do so. Universities do not like it but I think that the Government should continue in that regard, although I am not sure that it is enough. So finally I ask the Minister whether he is prepared to do more on this issue rather than less.

Photo of Baroness Deech Baroness Deech Crossbench 12:00 pm, 24th November 2005

My Lords, I am pleased to have this first opportunity to express my gratitude to your Lordships for the kindness and courtesy of my reception here in my first few weeks, particularly to the Officers and Attendants of this House. This kind reception has deepened my consciousness of the privilege I have in addressing this House on higher education. I was educated in an age when the staff of universities were free to take a chance on someone whose A-levels were not so good; when they were not afraid to criticise and offer kind help, and had all the time in the world for me. I owe my position to that education—the education which I received and, in my turn, have given and administered, and now assess in my position as the first independent adjudicator for higher education. I hope that no one will say that that adds to the regulatory burden, because I have replaced the visitor.

The noble Lord, Lord Norton of Louth, has drawn attention to the impact of bureaucracy, not whether it has an impact. That is incontrovertible: it is adverse and there has been an overreaction to it. There are two sources for this malaise. One is the lack of trust in higher education institutions and their lecturers, and the other is the legal and regulatory regime into which the courts have been brought. Some of the laws are specific to universities; others have had an accidental impact on them. The upshot is that professors are no longer trusted to make policy. The ethos of a lifetime of immersion in the profession seems to count for very little. Some £16 billion a year is spent on universities. Of course, taxpayers, students and parents expect a check that that is well spent. Only half of it, however, is public money. The check should never be so deep that it is at the expense of the young people about whom this is the concern.

Less than half the income of some universities is actually public, but they are all held 100 per cent accountable. The noble Lord, Lord Norton, drew attention to the overlapping and parallel jurisdictions of the many quangos—and their acronyms that we have become used to—to which I might add, in recent years, the Office for Fair Access, the Adult Learning Inspectorate, the TTA, the Higher Education Statistics Agency, the research councils, and so on. The cost was indeed calculated, for HEFCE, as some £250 million in 2000. It has dropped a little, as was referred to by the noble Lord, Lord Norton of Louth. Even now, however, the cost of regulation is enough to fund at least one university and many bursaries. It will cut into that extra tuition fee income, which the universities are going to get.

The lack of trust is highly symptomatic of what is going on. In her esteemed 2002 Reith lectures, the noble Baroness, Lady O'Neill of Bengarve, drew attention to the fact that every day the public is told of examples of untrustworthiness—of politicians, in schools, in hospitals and in companies. This has called forth an ever-greater response of more accountability, more human rights, and more transparency. Yet, in the end, as the noble Baroness said, you need trust, not a culture of suspicion. Education and its qualities could be destroyed. Professors are more examined against than examining. We seek never to uproot those institutions, even when they are very new, to check that they are meeting their targets. We end up stunting their growth and diverting them from their true purpose.

The second problem is the raft of laws—some, as I said, unintended in their impact on universities. For example, there have been four major education Acts in the past few years, as well as the Freedom of Information Act, the Children Act, the Special Educational Needs and Disability Act, the Race Relations (Amendment) Act and the Higher Education Act 2004.

Your Lordships might single out the overreaction to the Data Protection Act. In my old university, each and every student is asked whether he or she will consent to having his or her name published on the list of degree results. That leads to flawed statistics because some of them refuse. That will make fraud a little easier.

The Data Protection Act has also affected the quality of references because candidates and parents know that those references can be accessed by candidates once they are accepted. I imagine that even the most responsible of teachers and writers of references would fear the result if a parent were to see that the prediction of A-levels was anything less than perfect. Yet never more have we needed honest references in this age of proliferation of high grades at A-level.

It is taken as axiomatic that higher education has to do with higher earning power in a lifetime. I beg to differ. I am unhappy that students see themselves as consumers with rights and contracts. At the heart of regulation lies the notion that education can be delivered—a word I dislike. Education is not a neat package that is measured, delivered and quantified. It is a participatory and continuing process. It is endless with no certainty of outcome. Good teaching is essential but how far will it get without the intelligent reception, participation and contribution of the student?

Education—especially higher education—has often been likened to the package holiday and the prospectus. Students choose their university on the promise of a happy experience and wonderful buildings. When they get there they may find that the facilities are less than perfect and they have a grumble. That is the wrong analogy. It is more like the contract that you or I might make at the health club, if your Lordships join such things. The trainer and facilities are provided, but there is no guarantee that your Lordships will become fit and healthy, unless you go there every day making the maximum effort. In other words, education is not really quantifiable in the sense assumed by regulation.

Indeed, it goes deeper than that. There is no consensus in modern Britain about what higher education is for and what its benefits are. It is not a question of simply training students to use skills in future employment. It involves those unquantifiable things, such as induction into citizenship, leadership and employment, instilling ambition and motivation, the ability to savour work and leisure, independence of thought, intelligence and intelligibility, having a stake in the future and control over one's destiny, and an intelligent interest in politics. Those things cannot be precisely measured and regulated. They are inherently unquantifiable; they are a moving target.

British higher education has been a huge success internationally and in our economic situation. We now educate 43 per cent of school leavers compared with a few years ago. The outreach work carried out by universities is unsurpassed, as is their professional ethos. I call on Ministers to express their confidence in this magnificent story. That would do more to encourage non-traditional candidates to apply—far more than expressions of need for regulation, league tables and laws. Candidates need to hear expressed the nation's supreme confidence in its higher education institutions.

I hope that your Lordships will express support for the continuation of a Higher Education Regulation Review Group under Dame Patricia Hodgson in the hope that it will prune back some of the laws and free up the basic principles, to ensure that honesty and fearless constructive criticism can prevail for the benefit of the students about whom this debate is taking place.

Photo of Lord Howarth of Newport Lord Howarth of Newport Labour 12:10 pm, 24th November 2005

My Lords, it is my privilege to welcome the noble Baroness, Lady Deech, to our debates and to congratulate her on her maiden speech. I was fortunate enough to hear her address the All-Party University Group a year or two ago, when she was elegant, funny and wise. I said to myself that if she made half as good a speech today as she did then, we were in for a treat. We have had a treat and we look forward to many more.

The vice-chancellor of Cambridge pointed out in a recent address that the influence of government stretches back to the very beginnings of that university, almost 800 years ago. In the annual commemoration of the university's benefactors, she said:

"The sonorous prose of the form of commemoration can be read as a long saga of government influence".

If there has been anything like a golden age of university autonomy, I suppose it was in the 1960s and 1970s, as the noble Baroness, Lady Deech, suggested, when Westminster and Whitehall were willing to fund adequate salaries, rather generous levels of student support and the expansion of the university system on a kind of welfare state model, but did not otherwise interfere or ask much, and allowed universities to be what academics still dream about: independent creators and disseminators of knowledge and ideas.

Those two decades were exceptional in the history of British universities. Why have things changed so much? Why, in particular, have universities become so beset by bureaucracy? The scale of the Government's engagement with universities has grown alongside the enormous increase in the size of the sector, and the Government's financial outlay. In 1981 there were still only 46 degree-granting institutions; today there are 132 higher education institutions funded by HEFCE and 170 further education colleges providing higher education. The Government's outlay on higher education in England is more than £7.5 billion. The Government certainly have a duty to seek value for all this money.

We happen, probably unfortunately, to live in a time when audit has become a cult. A university is audited by internal and external auditors; if it is regarded as a "low-risk" institution, it will also be audited every five years by HEFCE. This audit, it is fair to note, is the new, improved "HEFCE-lite" version—an audit of procedures only, under HEFCE's new audit code of practice. If it is an institution at financial risk, it will be audited a lot more often and more thoroughly, which must be right. Audit by HEFCE is far from being the end of the story. A university medical school can expect to be audited by the Quality Assurance Agency, the NHS and assorted royal colleges, each with different procedures. A university education department will be audited separately by the QAA and Ofsted. If a university offers higher education in a further education college it will be audited by the QAA, Ofsted and the Adult Learning Inspectorate. Why, I would like to ask my noble friend the Minister, could the QAA not do the lot?

The Government want a great many different things from universities. They want universities to educate, of course, to develop the potential of individual students; to remedy the effects of class division; to socialise young people and instil civic values; to promote technology transfer, economic productivity and regional development; to produce a trained and qualified workforce, fit to compete in a global economy; and to carry out research of foreseeable social and economic utility, as well as basic research. The Prime Minister has reportedly suggested that universities will be to the 21st century what coalmines were to the 19th—and nobody now suggests that they should not have been regulated. There is also an old-fashioned view, which happily the Government do not disown, that universities should preserve, develop and transmit our culture.

Problems arise; these manifold purposes for universities are in tension. Moreover, since universities are, in principle, autonomous institutions, the state has no power to plan their activities so the state has, by fits and starts, developed a tortuous system of carrots and sticks to get the universities to do the things it wants them to do. When the Lambert Review of Business-University Collaboration was published in 2003, it reported that HEFCE was running between 40 and 50 separate funding initiatives on behalf of various government departments.

Lambert criticised the constant layering of new initiatives on top of old, often unco-ordinated across government departments and agencies. He also found that the financial margins of universities were so tight that they had no option but to chase every available pound of funding, but that with each new funding stream came new regulatory burdens.

Are universities private bodies, public bodies or put-upon hybrids? They are regulated as though they are public bodies. An instance is the application of freedom of information legislation to them, necessitating the hiring of additional archivists and administrators. FoI legislation does not apply to housing associations, which might equally be regarded as public bodies. Why, therefore, does it apply to universities? The European Union regards universities as emanations of the state, so that, for example, under the procurement directive, if a university wants to appoint internal auditors, it must advertise Europe-wide, I am told, to obtain five quotes. The cost to a British university of protecting intellectual property in Europe is four or five times that in America.

Our universities are also regulated as private bodies. New accounting standards that apply to plcs also apply to universities. Universities in Britain are batted between governmental dirigisme and market pressures. The Government impel universities towards a market model in some respects, but not in others. The 2003 White Paper spoke approvingly of HEFCE insisting that certain elements of annual grants should be tied to human resources strategies that reward good performance. The White Paper went on to say, somewhat brutally:

"This process has successfully kick-started the modernisation of human resource management in higher education".

This would seem to mean more procedures to measure what academics do, leading to wider differentials in pay. Whether this will prove divisive and demoralising, or rallying and invigorating, time will tell. On the other hand, the Government have denied universities the right to test the market in fees.

It is striking that there is little evidence that the growth of public regulation has fortified the sense of public mission within universities. My noble friend Lord Giddens touched upon this. British universities seem increasingly to espouse an atomised concept of the public interest. Students are now largely perceived, both by themselves and by universities, as customers of a service industry.

It is not only the DfES and its surrogates that regulate universities; the Department of Trade and Industry, via the Office of Science and Technology and the research councils, the Department of Health, and the Office of the Deputy Prime Minister via the regional development agencies all provide funds, purchase services, regulate and otherwise make claims on universities. Consultation documents from a plethora of departments, including the Treasury, rained down on universities in 2003 and 2004. The Government do not appear yet to have procedures to regulate their own regulatory incontinence.

The problem is recognised by the DfES and HEFCE, which have committed themselves to minimising accountability burdens. The Orwellian-sounding Better Regulation Task Force made a useful study that led, among other benefits, to a less aggressive and burdensome modus operandi by the QAA. The Lambert review made sensible recommendations for differential and more proportionate regulation based upon risk assessment, so that not all institutions should be subjected to the regulatory treatment judged appropriate for the worst, and HEFCE has been pursuing this course. Following the débâcle of the last research assessment exercise, when the Government failed to fund the implications of the vast process that universities had undergone, the Roberts report put forward recommendations for a less labyrinthine and exhausting procedure in future RAEs. In recent years, letters of guidance from the Secretary of State to HEFCE have been less detailed and prescriptive. HEFCE has converted a number of bidding programmes into formula funding. Sir Martin Harris has allayed many fears and principled objections by forswearing bureaucracy in the new Office of Fair Access. HEFCE commissioned studies of the bureaucratic burden by PA Consulting in 2000 and 2004, as the noble Lord, Lord Norton, reminded us. PA Consulting found that in those four years there had been a reduction of 25 per cent in the overall costs of meeting accountability demands on institutions. It is fair to acknowledge that that is substantial progress.

The recently established Higher Education Regulation Review Group (HERRG) has given added momentum to the drive to reduce bureaucracy. But bureaucracy fights back hydra-headed. The cost of accountability was found by PA Consulting in 2004, as the noble Lord reminded us, still to be £211 million, equivalent to the cost of running two large universities. Just as HEFCE has agreed to five-year audits and is consolidating its dialogue with institutions into a single annual, regulatory conversation, the OST demands that institutions produce 10-year plans on finance, capital, human resources and maintenance of estates. The new Higher Education Innovation Fund is to be allocated not on a formula but, at the OST's insistence, on a competitive bidding basis which PA Consulting finds entails costs that are two and a half times higher than other competitive funding schemes.

What is to be done about the Higher Education Statistics Agency (HESA)? I declare an interest, or at least I ask for a previous offence to be taken into account, having had responsibility for the 1991 White Paper which proposed that arrangements should be made to generate a greater coherence in statistics. We thought that was an innocent ambition. We now have every university putting in data returns for every member of staff once a year. That does not have to be done by schools, the NHS, the Civil Service or the armed services. HESA's Destination of Leavers from Higher Education Survey surveys every full-time leaving student and every part-time leaving student. Can one not get perfectly acceptable data by surveying, say, one in 10? Departments and agencies seemed to requisition statistics through HESA at whim. The Information Management Task Group for higher education has a lot more work to do. No one appears to be in charge of HESA. I think it is owned formally by Universities UK, but why do the vice-chancellors, through Universities UK, not insist on restraint and good sense?

It is not only the regulators who are at fault; many of the bureaucratic torments of academia are self-inflicted. The recodified statutes and congregation regulations of the University of Oxford add up to 175 pages in the Oxford University Gazette, two and a half of which recite the vice-chancellor's regulations on academic dress. The rearguard action continues against the new vice-chancellor's proposals to bring the governance of Oxford University into line with good practice across the globe. The RAE causes little to change, but the system, which costs £7.75 million annualised over six years, continues because academics, and not just those in the universities that always win, want it to continue.

Universities cope with regulation and as the noble Lord, Lord Giddens, suggested, some regulation has improved some performance. Many academics are bureaucratic adepts. I once attended a local branch meeting of the National Federation of Self-Employed and a man explained to me that his way of dealing with the Government was to stamp each form that arrived "not understood" and "return to sender". That alibi is not available to academics who are, by definition, clever people.

Vice-chancellors, pro-vice-chancellors, registrars and human resources directors can handle the paperwork, but at a cost. Expensive new posts are created in institutions that are under-funded to respond to external accountability demands. Where, as all too often, academics are not sheltered from those pressures, a toll must be taken of the quality of teaching and research and the academic profession becomes less attractive to the recruits that it needs. We still have wonderful universities, but they are defying gravity.

How can we go further in remedying the problem of bureaucracy? I suggest universities need to demonstrate that their corporate governance and their information and financial control systems really are good to remove the excuse for stifling oversight. Universities should not protest indiscriminately, for example about strengthening procedures for risk management which should lead to a lightening of overall regulation, or about the move to full economic costing, which should result in their being paid something more like the true costs of research commissioned from them.

As the noble Baroness, Lady Deech, said, government needs to be more willing to trust the universities. In his retiring oration as vice-chancellor of Oxford University in 2004, Sir Colin Lucas remarked, sadly, that government regulation has been articulated so visibly in a spirit of distrust of the universities. The Government must find ways to rationalise, co-ordinate and moderate their impositions on universities. There should be impact assessments of all proposed new regulations—individually and in combination. Their authors should be identified and rogue departments should be corralled. Somewhere in government there should be a power to stop new regulations in their tracks. The HERRG or some such body should be maintained on a permanent basis—there is some doubt about whether that is to be so—to carry out sceptical invigilation of regulation.

Bureaucracy will always be with us, but the Government should make the price that it levies more worth paying by making policy and regulation more stable, funding universities more generously and allowing them more freedom.

Photo of Baroness Shephard of Northwold Baroness Shephard of Northwold Conservative 12:25 pm, 24th November 2005

My Lords, I congratulate my noble friend Lord Norton on bringing these issues before your Lordships' House. The debate has been extraordinarily interesting and well informed. My noble friend Lord Norton set the tone. It is of course a particular pleasure to take part in a debate which includes the maiden speech of the noble Baroness, Lady Deech. If today is anything to go by, we have many further treats in store. She will obviously make a terrific contribution to this House. I am sure that noble Lords were also immensely interested by the contributions of the noble Lord, Lord Giddens, who spoke from absolutely first-class experience, and the noble Lord, Lord Howarth, who, as ever, brings a very stimulating analysis of the situation.

I declare my registered interests as a member of the Council of the University of Oxford and as a member of the board of the department for continuing education at Oxford. A number of my remarks are informed by first-hand experience of the impact of bureaucracy that I have gained in those two positions. I know that the Minister, who is a very good listener, will have had his ear bent during his contacts with the University of Oxford, with which I know that he continues to have close links.

In England, the sector includes around 130 institutions, educates more than 2 million students, employs more than 300,000 staff and accounts for a sliding scale of public money. Interestingly, a number of figures have been quoted in the debate. No doubt the Minister knows the exact sum. I thought that it was around £9 billion-plus. But whatever the sum, it is huge. It is obvious that such a sector has to have checks and balances. Institutions have to be accountable. That is understood.

At the risk of appearing immodest, not to say stuck in the past or possibly breaking some invisible rule of your Lordships' House, I draw your Lordships' attention to the view of Universities UK that the relationship between government and the sector should follow the model established in the report produced by the noble Lord, Lord Dearing, in 1997, for which I must also bear some responsibility. Universities UK, in quoting approvingly from the report, stated:

"Institutional autonomy should be respected. While we take it as axiomatic that the government will set the policy framework for higher education nationally, we equally take it as axiomatic that the strategic direction and management of individual institutions should be vested wholly in the governance and management structure of autonomous universities and colleges".

I am rather glad to come before the noble Lord, Lord Dearing, because he might refer to the many conversations that we had in coming, finally, to the kind of definition that there should be in the relationship between government and higher education. We finally came to the conclusion that universities and institutions of higher education contained quite a lot of rather clever people, as the noble Lord, Lord Howarth, said—quite as many as there might be in bodies set up by government and, indeed, in the department. Therefore, surely, they ought to be responsible and able to conduct many of their own affairs, having taken into account the question of accountability for the use of public money.

There is a saving grace for the Government in the rather difficult picture that has been painted this morning of the growing burden of bureaucracy; that is, that universities and colleges now receive funding from a variety of sources. That is why there is vagueness about the total amount of money spent on the sector. Each of those funding sources will obviously be anxious to establish its credentials of accountability, which in many ways is correct. But what is unacceptable is a situation such as that which occurred in 2003, when universities and colleges were required to undertake more than 60 separate consultation exercises. When one remembers that only 300,000 people are involved in the sector, that is quite a lot of work for each person. One would have thought, and hoped, that those who were consulting would have understood that the consultees' main purpose was to educate their students and encourage the development of scholarship and learning, not to fill in forms. But it seems, in that particular year anyway, that it was the task of nobody at the centre actually to think about the overlapping and cumulative burden placed on individual institutions by the collective enthusiasm for information and new procedures on the part of those involved with them. Had any representative of the inquiring bodies been present as the mounting piles of paper were discussed by academics and governing bodies, they would have been considerably enlightened as they heard what academics thought all that paper ought to be used for.

More seriously, this amount of inquiry and questioning has undoubtedly had an effect on morale in higher education, as the noble Lord, Lord Norton, pointed out. Universities UK notes a welcome reduction of 25 per cent in the regulatory burden imposed by HEFCE during the past four years. This, rather sadly, has been counterbalanced by an increase of 60 per cent in the regulatory burden imposed by other bodies. In addition, considerable extra compliance costs have arisen from the demands, as has already been said, of the newly established Office for Fair Access and the Teaching Quality Information and National Student Survey, and from the requirement for full economic costing.

It is obviously accepted in Oxford and in other institutions that accountability is necessary where public money is involved, but there is, and should be, rather less than unanimity where micro-management from the centre is involved. I shall give a couple of examples of the more ludicrous requirements that have been imposed this year on Oxford and, no doubt, on other institutions, by HEFCE as it happens. The first example is a circular which was sent out in October, rejoicing in the title Monitoring Institutional Sustainability. Your Lordships will need no reminding that communications arriving at a university are scrutinised not only for their purpose, but for their transparency and comprehensibility. Some of those who read these communications, of course, may include internationally recognised linguists. I invite your Lordships to imagine the reception that this document's immortal prose received from academics. Among many other things, it stated:

"Please provide a framework which sets out how the long-term sustainability of the institution is being managed ... this is essentially a statement which sets out how far and on what basis the leadership of the institution consider that the institution is on a sustainable trajectory".

Oxford is 800 years old. I think that its sustainable trajectory—I find difficulty in saying "trajectory"—is perhaps established by now. Other delights were received during the year. Another circular from HEFCE was stirringly entitled Self-Assessment Tool for People Management in HEIs. The noble Lord, Lord Giddens, mentioned Kafka earlier. Another noble Lord mentioned Nineteen Eighty-Four. Really, does one need to go much further? The circular begins:

"This letter explains the purpose of the self-assessment tool for people management, and how use of the tool is one method which will enable us to mainstream our funding to institutions under the Rewarding and Developing Staff Initiative (R and Ds)".

I must emphasise that these documents are taken seriously. They are worked on and worried over, and they are completed as competently as possible, not least because, in the case of the second document, funding is attached to their completion. But I am bound to say that one is left wondering whether time could be better spent on accomplishing the real tasks of a university.

The Minister may feel that I am being unfair or, at the very least, selective, which I admit. But I reassure him that cheerier words are to come. A great deal of anxiety was felt in Oxford about the proposed access agreement, not least because the colleges and the university have been making enormous strides in outreach and access for a long time. That is due in no small part to the work more recently done by the noble Baroness, Lady Deech, in her capacity at the university before she took over her present responsibilities. Visits to schools and colleges throughout the country; partnerships with LEAs; summer schools for underrepresented groups; regional events; information programmes for teachers, including professional development weeks; and subject-specific enrichment activities arranged by departments—all those approaches have been employed to ensure that Oxford encourages students from all backgrounds to apply. Pleasingly, a recent report from the NFER, commissioned by Oxford and Cambridge, has found that the focus of perception of Oxford and Cambridge among students and teachers has shifted from social mix to prestige and academic quality. That is a very welcome shift. Naturally, both universities are delighted, although we accept that much more remains to be done. The efforts that have been made by Oxford were recognised in negotiations with the Office for Fair Access, as was the fact that the necessary changes were imposed with a light touch.

However, the question posed by the noble Lord, Lord Norton, remains: is valuable time, which could be better spent on accomplishing the real task of a university—that is, educating students and encouraging the development of scholarship and learning—being wasted on the plethora of consultations and micro-management initiatives that are hitting universities from every direction? The answer is quite clearly yes on the strength of evidence submitted by universities, not to mention the contributions in the debate today, but, hearteningly, the Government seem to accept the point, because last year they established the Higher Education Regulation Review Group. The group is entirely to be welcomed, as are its findings; for example, that there has been,

"an accretion of overlapping requirements"— that is a key point—

"for reporting, data production and inspection or audit in higher education", which has created,

"an atmosphere of regulatory intervention, lack of trust and a compliance culture, with the potential to inhibit confident and innovative university management".

That lack of trust really has to be taken seriously by the Government. Those are serious criticisms, and I am sure that the Minister will take them seriously. But they are capable of solution. Indeed, HERRG proposes solutions, such as reducing the number of special funding streams, abolishing multiple demands and so on.

The Government are to be congratulated on setting up HERRG and on a number of other courageous decisions that they have taken on higher education. However, I think that the House will look forward to hearing from the Minister that the Government, in the light of their experience so far, now believe that higher education can be trusted largely to run itself. In the words of the noble Lord, Lord Giddens, let us hear it for universities and for trust in them.

Photo of Lord Dearing Lord Dearing Crossbench 12:39 pm, 24th November 2005

My Lords, I am the third speaker who has connections with Hull University, and I express my indebtedness to that university. It is always a pleasure to be able to listen to, and now to follow, the noble Baroness, Lady Shephard, especially when she refers with approbation to something that she and I worked out long years ago. I respect the noble Baroness, Lady Deech, for her contribution. In the light of the quality of her thinking and the clarity of her exposition, I say, Minister, watch out for the future!

As a former administrator of 30 years' standing, you would not expect me to seek to bury bureaucracy. However, I agree very much with the noble Lord, Lord Norton, that it needs to be kept in its place. I congratulate and thank him for initiating this debate.

Part of the problem of bureaucracy arises because those who distribute public money may be more concerned to avoid transgressing the constraints than to achieve the policy objectives. They are conscious of the gelding shears that lie in wait for them should the things that happen from the use of the public money which they have authorised be offensive in terms of probity or equity. So there is a tendency to protect oneself. A second reason for the problem is that it seems that from the point of view of those demanding information or requiring procedures, what happens at the other end is at no cost—it is on free issue—so there are no budgetary constraints on the demander.

When I was chairman of the Post Office, one of my main problems was to constrain my enthusiastic and able lieutenants from demanding information and initiating new policies. I had to resolve that by creating a choke on their endeavours, by saying, "Nothing may happen without it coming to an executive board member for approval". There needs to be a constraint because it is on free issue—and were it not for my own perception, it would increase the bureaucracy if one gave the demander a constrained budget and had to pay for information. That would create more bureaucracy in getting the information to find out what it had all cost. But we need, therefore, effective instruments.

On the other hand, as you would expect of a bureaucrat, I am not going to bury him. I can cite an occasion when, in working with the committee of inquiry that the noble Baroness, Lady Shephard, appointed in 1996, we gave evidence that caused us to be very concerned. I mention that not as a criticism but as an illustration, because the grounds for that criticism have passed. In the evidence that we received, a body called HEQC said:

"the Council's work does make it clear, that the consequence of current changes in higher education is that traditional understandings of what a degree is no longer hold good ... essential aspects of the academic infrastructure that used to support confidence in shared standards have been undermined, with resultant problems for students, employers, research councils and academics themselves, since the existing frames of reference no longer match reality".

There are times when there is a manifest problem. It is not surprising after a major expansion in the number of students and university institutions that there is a problem, to which there must be a response; but it must be within the framework that the noble Baroness mentioned—that of the autonomy of the institution. So we have to find a framework in which the legitimate needs of government and other funding bodies and charities can be met, which avoids a huge bureaucratic overlay on the institutions.

I have been very impressed by reports that have been mentioned, one done under Dame Patricia Hodgson and the other under Dame Sandra Burslem. They have addressed the issue of the overburden and come forward with constructive proposals to enable government and these bodies to obtain the information that they need without overwhelming universities. That has come up in other speeches; but I put it to the Minister that with the nature of the problem, which will never go away because of the forces that I have mentioned, we need a presence or group or whatever one wants to call it that will continue the good work of the two committees to which I referred. In that way, there will be a continuing choke on the enthusiasm of governments to introduce legislation without consideration—because many departments are not particularly concerned with the burdens on universities—which will cause government to take a balanced decision on the needs of the state and the needs of the institutions. I urge the Minister to respond to the representations that have been made about the need for a continuing capability.

The second thing that is in my mind—it has been referred to several times—is the multiplicity of bodies seeking information. Reference has been made to the excellent briefing that Universities UK provided, as it often does for a debate, which refers to the way in which on the one hand there has been a saving of 25 per cent and on the other an increase of 60 per cent. I sometimes think, Minister, that it would save a good deal of time if we gave you a copy of the brief and shut up, but that would not be in accordance with normal parliamentary practice. But when there is a multiplicity of bodies, we have a problem.

I thought that it would be helpful to contact a university—not Hull on this occasion—to get some practical examples. It would take too much time to read them out, but I shall give them to the Minister. We must look to the Government to take a stronger initiative in integrating and correlating the demands of these various bodies for information at different times, covering much the same ground.

Last Saturday, I had the terrifying experience, having been summoned by one of my daughters, of assisting my granddaughter with her physics homework, which took me back more than 60 years. The issue on this occasion was electrical circuits. I discovered by hastily reading her notes, before I guided her through these mysteries, that if one wired a circuit in parallel rather than in series, the electrons would be buzzing around by the trillion; but if you constrained the flow of information more and more through one channel by wiring in series, one constrained the little beasts. What I am saying is that if there is a multiplicity of bodies in parallel seeking information from universities, rather than it being sought through one channel, it is no wonder that you get a plethora of inconsistent unrelated demands. The need is, when it comes to factual information, to see HESA's role not only as a demander but as a channel, which is a choke in itself—and a force for correlating these demands. So my second point is that when information is being asked for in parallel, we should get it through one system—and we must have a good resister in the circuit.

It is not the case that the bureaucratic process needs to be burdensome. Reference has been made to the work of the small group under Sir Martin Harris, called Fair Access. As I listened to the noise, while there was much initial concern, it seems to have been handled with sensitivity and without a lot of burdens. I believe that that body has a very small staff of four. So it can be done with proper thought and sensitivity.

I want to conclude by referring briefly to the broader issues that the noble Lord, Lord Norton, the noble Baroness, Lady Deech, and others have raised on the role of universities. The noble Lord referred to three costs. I was very impressed by his reference to "opportunity costs"; I got out my economic textbooks and looked it up in my mind—and, yes, it is a good phrase. The noble Lord, Lord Howarth, referred by analogy to the role of universities and the other mainsprings of life. As I have said before, in medieval times the natural centre for the development of communities and of commercial and economic wellbeing was the castle. Then, in the 18th and 19th centuries, it moved to great manufacturing. Now, the centre will increasingly be the fountains of knowledge and research, the universities.

As the noble Lord, Lord Norton, said, if you inhibit the free thinking, enterprise and drive of academics with controls, you inhibit our overall wellbeing. As the noble Baroness, Lady Deech, said, universities have wider roles than just economic, and I was impressed by her recalling these. One of the roles I feel strongly about is that universities should be part of the conscience of society, and should speak out boldly on these issues without fear of any consequences.

The universities are jewels in the national crown. There is a need for more trust, and to recognise the legitimacy of systems and procedures to see that money is well spent for the purpose intended. However, there must be arrangements along the lines we have discussed to ensure that the universities are in good health and full enthusiasm, and that the public purse is increasingly protected by recognising where the responsibility really lies.

Photo of Baroness Sharp of Guildford Baroness Sharp of Guildford Spokesperson in the Lords, Education & Skills 12:51 pm, 24th November 2005

My Lords, I join with others in thanking the noble Lord, Lord Norton, for introducing this stimulating debate. I very much agree with the noble Baroness, Lady Shephard, that it has been interesting and informative. I have enjoyed listening to all your Lordships and in particular to the maiden speech of the noble Baroness, Lady Deech. Like others, I look forward to hearing from her frequently in future.

I also ought to declare an interest. I have spent a good part of my life as an academic. For the past 20 years I have been at the University of Sussex, where I remain a visiting fellow. Indeed, I will be going there tomorrow to deliver a seminar on science and government, so I retain a continuing interest in the subject.

My academic career takes me back to the age that the noble Lord, Lord Howarth, mentioned as somewhat exceptional, the 1960s and 1970s, when the UGC was the main funding body for universities, and funded them with block grants and quinquennial reviews. It was much less oppressive in terms of bureaucracy. In fact there was remarkably little bureaucracy, and most of us would agree that perhaps it was all a little too easy. It was too much of an old-boy network in many senses, because it was indeed largely old boys—there were very few old girls involved in that network. There was a case for tightening up on the culture. Whether we have swung too far towards micro-management has been one of the underlying questions in today's debate. It is an issue I shall come back to.

The central issue is the one brought up by the noble Baroness, Lady Deech; that is, the question of trust. The UGC more or less trusted universities implicitly, and the breakdown of that trust underlies the development of the "audit culture". This culture developed in the 1980s, with the obsession of Margaret Thatcher's government with the notion of accountability and the question, "Are we getting value for our money?". With rising public expenditure it was right that these questions were asked, but again one has perhaps tipped over too far towards the audit culture. One of the interesting features is the degree to which that culture has been picked up and, indeed, expanded and honed by the Labour Government. A new managerialism has been applied to it, so that there is a new vocabulary, but, if anything, the micro-management has been extended rather than rolled back.

I fully understand the problems of the overlapping empires of the different bodies, but I—and, I think, these Benches—also go along with the view expressed by the noble Lord, Lord Howarth, and the noble Baroness, Lady Deech, that in many senses the universities have proved themselves to be dynamic and responsive to the challenges they have been confronted with. One can argue that the accountability regime was necessary because at the end of the 1980s we expanded the universities so fast. One of the interesting features was that at that point very little extra money went in. The amount put into teaching in universities increased very little throughout the 1990s, and it was not until 2002 that we began to see it increasing substantially.

One of the results of this was the feature noted by the noble Lord, Lord Norton; namely, that the student/staff ratios have rocketed from roughly 9 to 1 in 1989 to 18 or 20 to 1 today, which, as he noted, is larger than in our secondary schools. In addition, we have seen the overcrowding of buildings and the increasing demoralisation of staff. During the 1990s I was myself an academic, and I saw more and more of my time consumed by the whole process of running a research group or a department. There was less and less time to do one's own research, which was crammed into evenings and weekends. You knew frequently that you were not doing as good a job as you ought, because you just had not got time to do it. There were constant pressures and apologies to my husband because I could not take part in the activities he wanted me to, because I just had to complete an article or get a chapter finished. This was what was so oppressive.

In many senses, the apogée of this audit regime came with the example of the department of economics at the University of Warwick, which began putting figures on this. They looked at how much it had cost the department to undertake the QAA exercise in 1999, and came to the conclusion that in one department alone it had cost them over £250,000. That led to the HEFCE asking the PA Consulting Group in 2000 to look at this.

Photo of Lord Giddens Lord Giddens Labour

My Lords, I thank the noble Baroness for deferring. With all these costs, one should take account of net costs. Students who apply from abroad, for example, expect good teaching. The QAA regime has probably contributed to the volume of income flowing into universities, so it is a mistake to talk just about the gross costs.

Photo of Baroness Sharp of Guildford Baroness Sharp of Guildford Spokesperson in the Lords, Education & Skills

My Lords, I accept that it is a mistake to talk about the gross costs. I accept that we need to have a quality assurance regime, and that we have benefited from the degree to which there is quality assurance regarding our mainstream universities and the attraction of foreign students coming from that.

Apart from the issue of the immeasurable costs identified by PA Consulting, the question is, who is looking at the guardians here and how much are they costing us? Quis custodiet ipsos custodes? One aspect of all this, and of the work of the Better Regulation Task Force which has also been mentioned, has been that we have changed the framework of the quality assurance group from departments to regulations. The group has been set up under Dame Sandra Burslem, whose report in the summer was a refreshing and frank assessment of its current activities. The other major activity to get to grips with the bureaucracy, which has also been mentioned, is the setting up of the Higher Education Regulation Review Group—HERRG, as it is called—under Dame Patricia Hodgson. I rather liked Alan Ryan's comment in the Times Higher Education Supplement on 15 August in relation to the setting up of these two groups. He said:

"If South Pacific was right that 'there is nothing like a dame', two dames must be unbeatable".

The report of the Higher Education Regulation Review Group—with its terms of reference being,

"to review policies for their regulatory impact on higher education in England, regardless of departmental origin, to explore existing areas of bureaucratic demand and to recommend ways of doing things better"— sums up what one wanted from it. In its initial report, picking up the theme of trust, the group quite openly said that its main task was,

"to improve trust on all sides".

The report continues:

"Unless and until an institution is at risk of failure, funding bodies should expect to place greater reliance on management, audit and governance arrangements within colleges and universities themselves, with extra reporting by exception and only where justified by ... risk".

Dame Patricia and her group have achieved some very useful banging together of heads, particularly in terms of the gathering of statistics—everyone seemed to require different sets of statistics, and she has managed to pull that together—and the rationalisation of funding streams. The group is now working to achieve a concordat between the relevant inspection agencies and funding streams so that HESA becomes a single source of base data statistics and the QAA itself supplies basic inspection and quality assurance data for the whole of the sector.

As other noble Lords have noted, although these initiatives have been very welcome, one of the problems is all the other initiatives that are going on around them. So far, the OFFA has not made very much impact. The working out of bursary arrangements has been very substantial, and we have all noted that it has managed to achieve that with a relative minimum of bureaucracy. However, we have to remember that each university will have to determine students' applications for bursaries while having regard to the means tests that they have set themselves.

I think it was the noble Lord, Lord Howarth, who mentioned the Parliamentary Question last week in which it was revealed that, last year, HEFCE had issued 1,573 pages of guidance. In the Answer, Mr Rammell made it clear that the department conducted its relationship with the university sector through three non-departmental public bodies—the Student Loan Company, HEFCE and the Office of Fair Access. He then went on to note what each had been doing. But what was missing from the Answer was what the department itself does. As we know from HERRG's initial report, in 2003 the department issued no fewer than 44 consultation documents to the universities. In addition, UUK issues consultation documents. So it seems to me that the Answer was, at the very least, economical with the truth.

Mention has also been made of the new report from PA Consulting. It is good that, in present financial terms, the cost of bureaucracy has decreased from £280 million to £211 million. But £211 million is still a very large amount of money. We have to reflect on whether it is necessary for the sector to be inspected and audited quite so hard and on quite so many different fronts. I recognise, of course, that there is gold-plating, which in many senses elaborates the cost.

I come back to a thought expressed by Tony Travers, professor of local government at the London School of Economics, at the end of the 1990s, when he was considering the university sector. He said:

"Stalin would have been proud of the system of ... controls imposed on the higher education system in this country".

That put me in mind of three lessons that I learned from Alex Nove about the impact of the command economy. I used to teach the economics of command economies, for which Alex Nove was very much my bible. The first was that micro-rationality leads to all kinds of distortions. If your target is set in terms of the number of nails, people will produce many small nails; if you set your target in terms of the weight and size of nails, people will produce many very large nails. The first point, therefore—I suppose it is Goodhart's law—is that any target distorts the outcome that you seek. The second lesson that I learned was that targets create fixers: those who will sell themselves as able to twist your statistics, meet your targets and secure the desired outcome of the system without your having to do too much. You can find yourself paying out a lot of money for your fixers. Thirdly, it creates a regime of cheating, because cheating becomes acceptable. We have to be aware of all those issues.

From these Benches, I conclude by endorsing the remarks made by the noble Baroness, Lady Shephard; namely, that although we agree that where large amounts of public money are spent there should be accountability, it is also important to respect the autonomy of institutions, and that the definition which she and the noble Lord, Lord Dearing, ultimately came up with is a good one:

"While we take it as axiomatic that the government will set the policy framework for higher education nationally, we equally take it as axiomatic that the strategic direction and management of individual institutions should be vested wholly in the governance and management structure of autonomous universities and colleges".

Photo of Baroness Buscombe Baroness Buscombe Spokespersons In the Lords, Education 1:08 pm, 24th November 2005

My Lords, I begin by thanking the noble Lord, Lord Norton of Louth, for introducing this important and very timely debate.

I congratulate the noble Baroness, Lady Deech, on her brilliant maiden speech. I first met the noble Baroness some years ago when we were on a panel of "Any Questions" in Sheffield. I recall that it was my first appearance on that show and that I felt like a terrified rabbit facing headlights. The noble Baroness's calming and self-assured manner was a lifesaver. I am very pleased that she is now among us. Indeed, I believe that your Lordships' House is a better place for her presence.

Our economy needs high quality and innovative research to drive British industry forward and improve our nation's quality of life. Our universities must continue to take the lead in this. However, a strong educational ethos, which attaches to each individual university, is now diminished by uniform regulations that undermine individualism.

I am in danger of repeating what I think has been said at least twice, first by my noble friend Lady Shephard and, secondly, by the noble Baroness, Lady Sharp. It is also a repetition of what the noble Lord, Lord Dearing, said. I shall therefore cut it short. It is to say, as he said in 1997, that institutional autonomy should be respected. Institutions must have the autonomy to develop their own academic culture to push research and development forward. As we have already heard, there is a collective burden on universities and academics from a number of bodies, including the QAA, the RAE and the HEFCE. A university's compliance with each of the different bodies it needs to please is not always compatible. A university has to provide detailed information on the standard of postgraduate supervision to six research councils and the arts and humanities research board, plus the funding council and the QAA. The Higher Education Funding Council for England (HEFCE) requires universities to complete an 80-page self-assessment form in order to qualify for mainstream funding through the rewarding and developing staff funding stream.

Dame Patricia Hodgson, chair of the Higher Education Regulation Review Group, considers:

"So-called best-practice codes are multiplying on every issue until they threaten to suffocate good management".

Dame Patricia Hodgson also estimated that the annual cost of regulatory demands to the sector was greater than the £210 million estimated by a HEFCE report last year. Like the noble Baroness, Lady Deech, I hope that Dame Patricia Hodgson's review group is able to prune back some of the laws.

The Research Assessment Exercise can be a demoralising force for academics who feel that they are being scrutinised under a microscope. This is not the environment in which our academics can flourish. They are not provided with the necessary freedoms to pursue long-term research. Funding streams encourage collaborative research but the RAE focuses on individual author publication. Time for teaching and research is squeezed out by paperwork. The knock-on effect for students is massive. They have less interaction with tutors and teachers. Students are getting less out of academic life. My noble friend Lord Norton of Louth said that regulation imposes a real cost in a number of ways, with a burden excessive in relation to need, and with an impact on attracting and retaining academics. People are put off going into the profession. Academics are under-paid, under-valued and over-burdened, too constrained from doing what they want to do. Academics are not paid to be administrators and it is certainly not their chosen profession. As my noble friend Lady Shephard asked, is valuable time being wasted on a plethora of regulatory initiatives and micro-management of our universities at every level?

Academic professionals are under enormous stress. In May 2005 a survey undertaken by the lecturers' union, NATFHE, found that many lecturers were working over and above their contracted hours. Some 91.5 per cent of respondents said that they were not paid for the extra hours they worked. More than 60 per cent of respondents said that their workload somewhat affected the quality of their support to students and the quality of their students' experience and 24 per cent said that it significantly did.

Lecturers have little personal time. The same survey concluded that 43 per cent of respondents said that their workload significantly affected their personal life. One could argue that the long holidays they have provide them with time to catch up with administration and to earn an extra income. This is not the case. For example, external examiners are paid very poorly. When academics are not teaching they are involved in research. A barrage of paperwork in addition to that is unacceptable. Massive disincentives are built into the system. Intelligent graduates must be attracted and encouraged to stay in our universities, not put off by numerous regulations. There were reports last week that the Education Secretary left a conference hall by a side door in an attempt to avoid hundreds of lecturers protesting over pay. Is that illustrative of the Government's attitude towards higher and further education professionals?

We appreciate that there has been some progress in reducing bureaucracy.

Photo of Lord Giddens Lord Giddens Labour

My Lords, I thank the noble Baroness for giving way. What policies would the noble Baroness's party institute to put up the pay of university teachers, and by how much would it want to see that pay increased?

Photo of Baroness Buscombe Baroness Buscombe Spokespersons In the Lords, Education

My Lords, I am not prepared to answer that question. I do not think that it is relevant. We are talking about university bureaucracy. I am trying to illustrate that those involved in higher education are looking for support and respect from the Secretary of State but are being ignored. However, this is not the place to discuss how my party would fund this matter, and I am certainly not in a position to do so. The noble Lord's party is in government. It is my party's job to discuss the way that we consider those involved in higher education are being treated.

We appreciate that there has been some progress in reducing bureaucracy. The Government have made some limited progress in reducing that bureaucracy. Apparently the cost of external bureaucracy to universities had fallen by 25 per cent in real terms over the past four years, based on a study by PA Consulting of the demands of bodies such as HEFCE and the QAA. However, this appears to be based on the reduction in teaching quality assessment by the QAA. Regulation in other areas and from other organisations has increased by almost 60 per cent over the four-year period since the 2002 HEFCE/PA Consulting report. Universities UK considers that the main increase in regulation in this period arose from:

"Risk management requirements, the Higher Education-Business Interaction Survey, the NHS-WDC Student Numbers, requirements for monitoring and reporting on intellectual property and spin out companies and teaching quality information requirements".

Furthermore, the PA Consulting report did not estimate the costs of the compliance with the Office for Fair Access, teaching quality information/national student survey requirements and the impact of full economic costing, which have added further to the administrative burden. What are the solutions?

We on these Benches do not deny that there must be a system to hold universities to account—as so many noble Lords have said today—for the way that public money is used and to ensure that we have the very best standards. However, this must not discourage research and innovation; it must not hinder academic institutions in their work; instead, it must encourage and facilitate it. After all, how can we expect our academic institutions to inspire the next generation of researchers, wealth creators and philanthropists unless those in that pivotal teaching role are themselves inspired? Motivation is a much under-valued resource. That needs to change at all levels.

Is there a possibility for economies of scale? As the noble Lord, Lord Dearing, asked, do we need this multiplicity of bodies? As my noble friend Lord Norton said, the system may be effective but it is not an efficient one. Even if data can be gathered in an effective manner, they must be used intelligently to improve the system. Co-ordination between the various funding bodies needs improvement. They operate at arm's length on a discrete basis. We need to look at the co-ordination between funding bodies and involve university staff and students in the process. The Higher Education Regulation Review Group reported in June 2005 that:

"There could be much better co-ordination of quality assurance and data collection and fewer consultations. A major burden is caused by the fact that different funding bodies across government have developed their own reporting, data collection and inspection/audit requirements, with which they ask HEIs to comply".

The group recommends a formal concordat between the funding and inspection bodies in the sector to streamline the collection of data and quality assurance.

What assistance will the Government provide to HERRG in the implementation of its recommended "formal concordat"? In the Minister's view is it essential that there is co-ordination and clarity for university funding? Will the Minister confirm when the "perceptions of bureaucracy" poll in higher education will be carried out? When will the findings be presented?

In conclusion, I refer to three statements made in the House today. First, universities now survive largely on the good will of academics. That was said by my noble friend Lord Norton of Louth. The noble Lord, Lord Howarth of Newport, said that we still have wonderful universities, but that they are defying gravity. What the noble Lord, Lord Dearing, said was a practical approach to questioning why we are now in this position. There is probably an awful lot of truth in it. He said that those responsible for handing out public money are more concerned with transgressing constraints than achieving the aims. That goes to the heart of many more debates which take place in your Lordships' House on the spending of public money, and is something that we should all consider.

I hope that the Minister will take those three telling statements on board, together with the crucial reference by the noble Baroness, Lady Deech, to the lamentable lack of trust that now exists in our academics and academic institutions. The situation must improve if our academic institutions are to remain globally first class. In this country, we currently have an amazing resource in our higher education academics at all levels. The noble Lord, Lord Giddens, is quite right; let us say it here for British universities. But we are in real danger of losing that resource, and if we do we will not recover.

The Government have repeatedly stated that education is crucial to the future of this country. We all know that perfectly well; it is a given. The trouble is that the same Government have yet to show any demonstrable courage in setting our institutions free from their heavy, bureaucratic hand. Perhaps the Minister will lead the way. If he does, we will support him.

Photo of Lord Adonis Lord Adonis Parliamentary Under-Secretary (Schools), Department for Education and Skills, Parliamentary Under-Secretary (Department for Education and Skills) (Schools) 1:21 pm, 24th November 2005

My Lords, the House is indebted to the noble Lord, Lord Norton, for giving us the opportunity to discuss universities and bureaucracy. The noble Lord and I were once labourers together in the regrettably small academic field of those who study the working of parliaments. I was glad to hear reference to all kinds of people to whom in our rival interpretations of parliament neither of us went anywhere near. We had Trotsky, Kafka and Stalin in the course of the debate. I was waiting for my noble friend Lord Giddens to bring in Gramsci, whom he usually does on these occasions. Perhaps that is waiting for his next speech.

Mention was also made of Orwell, who has many more lessons for the debate today, not least in his brilliant essay on the use and abuse of English language. We might all agree—particularly the noble Baroness, Lady Shephard—that it should be sent to all those writing consultation documents that go out to the education world; notably, to the world of universities, where people are quite capable of reading them and understanding that their meaning may not require quite the convoluted language used in setting them out. I am glad that the noble Lord and I have finally been re-united in a common commitment to promoting the interests of higher education.

We have had highly distinguished contributions from other noble Lords with long experience of higher education, including the excellent maiden speech of the noble Baroness, Lady Deech, who speaks from decades of service at the University of Oxford. She is now, as she said, the new, light touch and non-bureaucratic independent adjudicator for student complaints. Her speech was every bit as hard-hitting and effective as those who knew us at Oxford would have expected. We will all be rushing out now to join our local health clubs while promising never to sue the owners, whatever happens to us in consequence. We welcome the noble Baroness to the House and look forward to her future contributions.

Before I get into the detailed points raised in the debate, I want to join my noble friend Lord Giddens in setting the wider context for some general remarks made today about the state of our universities. My noble friend and the noble Baroness, Lady Deech, asked for three cheers for universities and a recognition of the outstanding role they play today in our national life. They gave the first two cheers; I am happy to give the third.

Britain's universities, taken as a whole, are in a strong and healthy state. They represent one of the most valuable, thriving and competitive parts of the UK's modern economic and social fabric. Not only are they doing more than ever before to enrich our nation's economic and social life in a highly competitive way; they also continue the work that they have done over a long period in enriching our society—one which prizes knowledge and free inquiry. There is no need to take my own word for it. Appropriately for the debate, one of the clearest statements concerning the overall strength of the university sector came in the valuable report earlier this year by the now infamously named HERRG, the higher education regulation review group chaired by Dame Patricia Hodgson. In the introduction to its report, Dame Patricia says that our universities,

"are rightly seen as a success story".

The group continues:

"We have a critical mass of world class universities and a growing number of institutions offering leadership at national and regional level. Nationally, universities now educate more than 2.2 million students, employ over 300,00 staff and attract some £4 billion in foreign earnings".

I will return to the Hodgson report in a moment. But it is important to dwell at the outset on why our universities have achieved their absolute and comparative success in recent decades.

In part, it has been due to their great inherent strengths; the traditions of independence, excellence and free inquiry, deeply rooted in a liberal democratic tradition which has developed in this country over many centuries. But most UK universities are only a few decades old, if that. We can also point to significant successes in public policy—under both the previous government and this Government—which have contributed to the success of our universities. Under this Government, I would particularly mention the significant real-terms increase in state funding. For science and research, there has been a huge increase in investment, alongside maintenance of the unit of resource for teaching even as student numbers have risen—something which, alas, never happened under the previous government.

The noble Lord, Lord Norton, referred to the deteriorating staff-student ratio. In fact it has not deteriorated much since 1997. There was a substantial deterioration before that when funding, as the noble Baroness, Lady Sharp, said, did not keep pace with rising numbers. However, the precise figures in the staff-student ratio are a change from 17.6 in 1997 to 18.2 in 2003–04, the last year for which we have figures.

Of more direct relevance to the debate, perhaps, there has been a significant strand of public policy—under both the previous government and this Government—in the form of deregulating our universities. That sets them free from state control to enable them to develop more distinctive missions, and to serve society better as they see fit. The previous Government reduced state control in two crucial areas. First, they re-established the polytechnics as fully fledged universities, free of local government control and regulation; secondly, they decided—entirely correctly—to deregulate the overseas student fee. These changes were hugely liberating for higher education. We have taken both of them further. We have enabled a wider range of well regarded higher education institutions to become universities and award their own degrees, and—through the Prime Minister's initiative on overseas student recruitment, which the House discussed earlier this week thanks to a question from the noble Lord, Lord Dearing—helped universities to increase overseas student recruitment substantially, achieving an extra 88,000 overseas students in just five years. They bring with them substantial additional income, as well as wider educational and social benefits.

Since 1997, this Government have made two further radical deregulatory changes, which I believe will come to be seen as at least equally transformational for our universities. The first was the decision recommended by the report of the noble Lord, Lord Dearing, which was commissioned in the first instance by the noble Baroness, Lady Shephard, to introduce in England a fee paid directly by students over and above existing state funding. The second was the Higher Education Act 2004, which deregulated the fee system further, allowing universities to charge a variable fee of up to £3,000 with a new and fair system for repayment by graduates.

The noble Lord, Lord Norton, said that university lecturers were underpaid, under-resourced and undervalued. My noble friend Lord Giddens asked the noble Baroness what the Opposition might do about it. I can say what the Government have done. That is not only to maintain the unit of resource in real terms and to invest substantially more in the universities—particularly in science and research—but also to give universities the freedom to raise additional funding themselves. That is something which they were not allowed to do before. All of that is crucial context for our debate.

In terms of many quality and efficiency measures, the United Kingdom's university system is widely regarded as one of the foremost in the world. Certainly, many European observers envy our system, particularly because of the freedom and autonomy which our universities enjoy in matters such as staffing, course flexibility and the diversity of funding sources open to them.

Our universities are broadly successful, and I see that as the starting point for the debate. Our concern about bureaucracy—which is a serious and continuing concern—is that we want universities and their staff to succeed to the maximum extent possible free of red tape. That brings us directly back to Dame Patricia Hodgson's report. After the introductory section that I quoted from, she refers to the fact that this year the Higher Education Funding Council for England will channel more than £6 billion of public money into higher education in England, to which is added another £3.4 billion from the research councils, health authorities and other bodies, in a sector with an annual turnover in excess of £15 billion. As she said:

"Government and taxpayers need to know such large sums are well spent".

The challenge is to improve on a system of accountability, and we are all agreed in this debate that there must be a proper system of accountability, which is not one of command and control but on the contrary is as light touch as is consistent with effective audit and public responsibility.

Before I go into the detail, I shall say an important word about the Higher Education Regulation Review Group, which has been referred to throughout the debate. It is in the second year of what was originally intended to be a two-year life. It has done valuable work, which has been welcomed both by the universities and the Government, and it has a programme in hand to improve information collection and external inspection. Several noble Lords have asked what our plans are for its future, and I can give a clear answer to that question. My honourable friend the Minister for Higher Education met Dame Patricia and her colleagues earlier this week, and he told them that he would like the group to continue its work beyond the two years for which it was established. I am glad to say that they have agreed to do so. We will be asking the group to look as a matter of urgency at some of the requirements for universities set out today, including for universities that are more than 500 years old to demonstrate sustainable trajectories—and perhaps even those that are less than 500 years old as well—not to mention the assessment tool for people management and the consultation document on reworking and developing staff.

It has been generally acknowledged in the debate that we have made good progress on the specific issue of bureaucracy. Last year's PA Consulting report on accountability costs estimated that overall costs of meeting accountability demands had fallen by about a quarter in real terms over the previous four years, representing a real-terms saving of over £60 million. A particularly significant source of saving was the radical changes made to the Quality Assurance Agency, notably the abolition of the old system of subject inspection reviews, which I know from much personal interaction with university leaders at the time was an issue of acute and to my mind absolutely correct concern.

The issue of the QAA and subject reviews dominated the last debate in the House on this issue, also initiated by the noble Lord, Lord Norton, and I am glad to report that in that respect at least there has been radical change. However, I stress that our policy on regulation has not been based just on ad hoc decisions but rather on a wholly new approach to the issue of regulation, which dates back to the inquiry into higher education bureaucracy that we asked the Better Regulation Task Force to conduct four years ago. That report, published in 2002, set out interrelated recommendations under five headings, and I shall go through each of those five areas to set out what we have done. I stress that in each case we regard it as a work in progress, taking up the issue raised by the noble Baroness, Lady Shephard. We take seriously all the points made in the debate today, and I know that they will be taken seriously by the Higher Education Regulation Review Group as it continues its work.

The first recommendation by the task force was for better mechanisms to enable universities to challenge bureaucracy. The task force suggested a suitable group, working with the Minister for Higher Education, to agree an action plan to reduce burdens on higher education and to act as a gatekeeper to prevent unnecessary new burdens in future—hence the creation of the Higher Education Regulation Review Group, which has provided a consistent challenge to HEFCE and other stimulus to funders and policy-makers across government in respect of universities.

The second key recommendation of the Better Regulation Task Force was:

"The Government should ensure that it, its Agencies and those contracted by them, consider the likely impact of new proposals and publish them".

We have acted on that recommendation. The Government produced a detailed regulatory impact assessment for its higher education White Paper in 2003. HEFCE now routinely assesses the accountability burdens of all new proposals—for example, those for the new research assessment exercise which, like its predecessors, remains based on the peer review so widely supported across the universities. Real change resulted from those discussions. For example, the Office for Fair Access was a new burden following last year's Higher Education Act, which has been much referred to throughout the debate. There was a good deal of concern about OFFA. Indeed, the 2004 PA report highlighted OFFA as particularly worrying in its implications, but it added that much depended on how OFFA chooses to interpret and administer its eventual remits. Some 17 months on, we know what has happened to that remit—it is generally accepted across the university world that OFFA has not had the deleterious consequences that were feared.

Sensitive to the new model of self-regulation that we have been developing across higher education, we invited Sir Martin Harris, the outgoing vice-chancellor of Manchester University and a former president of Universities UK, to become the director of OFFA. I doubt that there is anyone more highly respected in the university world than Sir Martin. The process of signing off the access agreements under the 2004 Act for universities to be able to levy higher student fees has now been completed with virtually no controversy or bureaucracy. Sir Martin operates with a staff of three and a half. He has now signed off access agreements for every university, conducting discussion at an early stage in each case to minimise difficulties. OFFA has now set up a system for ongoing modification of access agreements virtually by exchange of e-mail. The only requirement—a perfectly fair one—is that changes to bursary regimes do not disadvantage the students they were established to serve. As my noble friend Lord Giddens so rightly said, the whole basis of our reform is that it should widen access to universities and not in any way narrow it. The access agreements meet a key requirement of the Better Regulation Task Force that new burdens on universities should replace old ones wherever possible. The access agreements replaced outright the widening participation strategies previously required of all universities by the funding council. All that has been accomplished well in advance of the introduction of variable fees next October.

The third task force recommendation was about funding streams, which have also been referred to during the debate. The task force identified the deep frustration and irritation in universities at the plethora of separate pots of money, each of which requires a separate bidding process. The task force identified 21 funding initiatives administered by HEFCE, and suggested that the Government should reduce them into a small number of key themes, with audit and reporting requirements in proportion to the amount of money involved. Once again, progress has been made, and continues to be made. After discussion with Dame Patricia Hodgson's group, HEFCE announced earlier this year that institutional special funding streams would be limited to eight at any one time. There will also be a minimum amount of £5 million per funding stream. HEFCE's financial strategy is based on the explicit principle that as much higher education funding as possible should be provided through core or block grants. That leaves as special funding streams initiatives which are intended to put some significant resource behind new policies seeking to meet agreed priorities, such as the new Centres for Excellence in Teaching and Learning, which have brought a real sense of recognition to teaching staff in a wide range of universities. That case involves £56 million a year over three years, to support institutions offering exemplary teaching in different subjects. We still see that kind of initiative as going through dedicated grants, but otherwise it should go through block grants wherever possible.

The fourth area of concern raised by the Better Regulation Task Force in 2002 was audit and inspection. As well as the issue of QAA subject reviews, which I have already referred to, the task force pointed to the many different agencies and professional bodies that audited and inspected higher education. Although I do not think that they had the parallel of electrical circuits directly in mind, their view was very much that of the noble Lord, Lord Dearing. The more you multiply the number of agencies responsible for inspection and the production of paper, the more you are going to get coming out at the other end in a kind of unrelated way. The task force challenged the Government and its agencies to find a better match between inspection and risk, and to place more reliance on institutions' own internal procedures. We have made real progress here, and we are on course to make more progress. In the case of the QAA we move from the laborious individual inspections of subjects to a new framework of self-assessment and institutional audits. The framework was examined earlier this year by a group chaired by Dame Sandra Burslem, formerly vice-chancellor of Manchester Metropolitan University. The group reported savings of 40 per cent on previous QAA costs. It also recommended a further simplification of the process of self-assessments and the QAA has accepted this recommendation.

We have also been paying close attention to those many other bodies which do impact on universities. The Training and Development Agency for Schools is from this year reducing by two-thirds the frequency with which Ofsted inspects teacher training courses. The National Health Service, working with the QAA, is developing a single comprehensive quality framework for all health courses, which were previously overseen by a mass of different and separate agencies. Given the importance of the health and medical teaching and research sectors to our universities, this is a vital piece of work and I expect to be able to bring the results to the attention of the House when it is completed next spring.

Once again, an important lead is being taken here by the Higher Education Regulation Review Group. It is promoting a concordat between all the major public funders and inspectors of higher education which we hope will be agreed by them in the spring. What may come to be known in due course as the Hodgson concordat would commit all those various different agencies that interrelate with the universities to rely on a single QAA judgment for their basic assurance about quality in a university—meeting a point made by my noble friend Lord Howarth about the need for the QAA itself to be in the driving seat in this area—only allowing further intervention to satisfy themselves about the quality of provision in their particular specialism. Ultimately we hope that independent professional bodies will also agree to co-operate in the same way—not just public bodies and inspectorates. I am pleased to say the Institution of Electrical Engineers and the Architects Registration Board have already indicated support for this and we will be encouraging others to follow in their wake.

Finally, I turn to the issue of data—the fifth area highlighted by the task force. In the one minute left to me I fear that I cannot explain the constitution of HESA and who it is accountable to—that it is a subject rather akin to the Schleswig-Holstein question. I can say that HESA has been removing and simplifying requests for data and HEFCE announced earlier this year that it was moving to a "single conversation" about financial returns from universities, with well run institutions no longer required to submit a mid-year financial return and other reductions in data obligations. The Hodgson inspection concordat that I mentioned will also cover data. All signatories will pledge to rely on HESA as providing the single source of basic data about an institution.

In conclusion, and as the Hodgson report rightly says, the challenge in this area is to achieve the right balance between national standards setting, monitoring and inspection on the one hand, and individual accountability on the other, recognising—this is the crucial point—that the accountability framework needs to evolve with a sector that is becoming more mature and skilled at intelligent self-evaluation and risk management, thanks to the changes of recent years. Those are precisely the objectives that we are pursuing. There has been good progress, but more is needed and I thank all noble Lords who have participated in this debate for the further advice that they have given us today.

Photo of Lord Norton of Louth Lord Norton of Louth Conservative 1:43 pm, 24th November 2005

My Lords, I am grateful to all noble Lords who have spoken. The list of speakers is notable for its quality. We have had a splendid maiden speech from the distinguished academic the noble Baroness, Lady Deech, and contributions from others who have worked in universities or have had ministerial responsibility for universities.

I join the noble Lord, Lord Giddens, and the Minister in giving three cheers for what our universities do. There is fantastic work done in our universities, not only in terms of research but in terms of teaching. Rather than hearing the words, "Do this, do that", academics will benefit enormously from hearing the words, "Well done". I may also be able to help the noble Lord, Lord Giddens, because it occurs to me that the term "selective scanning" might be a little more appropriate than "dipstick", if less evocative.

The noble Baroness, Lady Deech, has quite pertinently drawn attention to the impact of new laws which eat into academic time—we have to be trained in dealing with the legal requirements—as well as impose burdens on universities. We have had some compelling speeches from the noble Lords, Lord Howarth and Lord Dearing, as well as from the noble Baroness, Lady Shephard. I agree with the point made by the noble Lord, Lord Howarth: in the space of 40 years we have in a sense gone from one extreme almost to the other and that situation needs addressing. As the noble Lord, Lord Dearing, says—a point which has underpinned this debate—bureaucracy breeds bureaucracy; it needs restraining. Regulation is necessary, but it must be lean and efficient regulation.

I am most grateful to the Minister for what he said, as well as for recalling old days. I also acknowledge his courtesy in sending me and other noble Lords material in advance of the debate. As he says, academics are doing well. The problem is that they are not being paid for it. We have world-class universities, so why not reward them properly—both in terms of funding and in terms of a light regulatory regime? Much more money will be available to universities next year. My fear is that if we retain the existing regulatory regime, universities will play safe and devote resources over and above what is actually needed to meet the demands, or what university administrators anticipate as the demands, of the regulators. That is why we must tackle the problem of regulation now.

I welcome what the Minister has said on that issue, especially in relation to the Higher Education Regulation Review Group. As I have said in my speech, I acknowledge that there is some appreciable movement; the more that goes forward, the better. But, for reasons I have given, we still need to go further. That is what we need to keep pressing and I am sure it is something to which we shall return. My Motion calls for Papers. I mentioned that in 2004 universities received more than 1,500 pages of documents from HEFCE. There is already plenty of paperwork in existence; I do not wish to add to the burden. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.