Economy — Debate

Part of the debate – in the House of Lords at 12:17 pm on 5th February 2009.

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Photo of Baroness Warwick of Undercliffe Baroness Warwick of Undercliffe Labour 12:17 pm, 5th February 2009

My Lords, I am pleased to be able to contribute to the debate and I congratulate my noble friend Lord Eatwell on the way in which he introduced it. As he indicated, the situation that the country finds itself in is exceptional. The Government have announced a substantial package of measures to ensure that those facing redundancy and those seeking employment are helped back into work as quickly and successfully as possible. They have encouraged all sectors to play their part. I will focus my brief remarks on what the higher education sector can do and is doing to support the Government's endeavours and emphasise the importance of a high-skill innovation strategy for economic recovery.

The higher education sector is playing an increasingly important role in helping British businesses to survive the economic downturn and build for the future. Universities and higher education colleges have an unparalleled record in fostering innovation, enterprise and skills and in helping to create wealth and job opportunities. Universities are by their nature long-term organisations. World-class research, the development of a highly skilled workforce, consultancy work and the creation of new ideas, products and industries are all examples of their long-term benefit. They will be crucial in delivering the highly skilled talent that my noble friend Lord Eatwell emphasised. However, this does not mean they have not tried to meet the needs of business and learners in the short term.

Indeed, Universities UK, in which I declare my interest as chief executive, along with GuildHE and the Higher Education Funding Council for England, produced a leaflet called Standing Together, which highlights the services that universities have to offer business. This includes the use of consultancies within business schools, access to relevant sources of knowledge, and reskilling and upskilling through postgraduate courses, to name just a few. The leaflet, which has been sent to a huge range of business organisations, provides a contact point within each university in the UK so that businesses can go straight to whom and what they need. It has also been sent to Members in both Houses as a signal of the contribution that higher education can make.

A number of initiatives have been supported by the Government. Knowledge transfer partnerships, supported by the Technology Strategy Board, enable companies to access knowledge and skills from higher education institutions to use in the strategic development of their businesses. I understand that the Technology Strategy Board has agreed to double the amount of KTPs between 2008 and 2011. That should enable a wider coverage of the scheme to include the service sector, which has been hit particularly badly by the downturn. As of March 2008, there were more than 900 live partnerships, with many more in the pipeline.

Universities already have a track record in supporting business, from developing science and research parks next to university campuses to promoting businesses at the start-up and early development stage in incubation centres. An area where increased government funding is having real effect on the ground is through the Higher Education Innovation Fund. HEIF is a £400 million scheme funded by the English funding council and supports universities and colleges in reaching out to businesses and providing the ideas and skills that are needed for innovation and improved productivity.

It is often forgotten that higher education institutions are also significant players in their own right within regional economies. Through both direct and knock-on effects, they generated more than £45 billion of output to the UK economy, which is more than the pharmaceutical or aerospace industries. After the NHS, universities are some of the largest employers in a particular town or region and, as such, they are major purchasers of products and services. The Government have said that their departments and agencies should aim to pay small firms within 10 days of the receipt of an invoice. That is something that a growing number of universities are trying to achieve.

Many universities are involved in building projects to update 1960s infrastructure, with their contractors often working with small firms as subcontractors. Universities are now looking to their contractors to achieve the same turnaround time for invoices and, by bringing forward capital funding planned for 2010-11, the higher education funding councils are helping universities to create or protect hundreds of jobs in construction. Higher education institutions are also responding to fears about a drop in graduate employment by developing a number of schemes, such as creating their own internships for recent graduates, which will provide talent pools for local business and industry. They have introduced graduate start-up schemes, where funding for training and business support is given to graduates to start up a business, and they have improved information, advice and guidance for new graduates entering the job market. That is a clear difference from the last recession; businesses have now learnt that cutting back on graduate recruitment during the downturn costs them a great deal more three years down the line.

As I mentioned, universities are large employers in their own right. UK higher education institutions employ more than 360,000 people, which equates to 1.2 per cent of total UK employment. That level of employment provides an important lifeline in many areas that have suffered during the economic downturn. However, to continue to maintain this important lifeline, it must also be remembered that public money is necessary to underpin higher education. As we enter a very tight spending review process, whether before or after a general election, I urge Ministers to continue to maintain the unit of funding for teaching and ensure that research excellence is funded wherever it is found. With these two key areas supported, it is then possible to build on the successes of schemes such as knowledge transfer partnerships and the Higher Education Innovation Fund, which have already proved their worth, so that higher education, business and government can work together to ensure that the UK pulls out of the downturn and is well prepared to maximise opportunities for the long-term growth and development of the country.