My Lords, I thank the noble Lord, Lord Giddens, for introducing this very important debate on a hugely important subject. I declare an interest as the principal of Jesus College, Oxford.
As has already been said, the UK university sector is an outstanding success. In fact, it has been said that it is second to the United States. Actually, that is not quite right. If you correct for population size and investment-remember the United States invests 15 times as much as the United Kingdom in universities-we have three times the success rate, relative to investment, in the world's top 20. If you go farther down the league table, the story is the same. In short, our top universities are not just globally outstanding, but, as a whole, our university sector offers unparalleled value for money-three times as much value for money as the American system.
Given that extraordinary success story, it might be thought that the Government's attitude would be, "If it ain't broke, don't fix it", but the university sector is being thrown into a period of unparalleled turmoil, change and challenge. Why is that? One motive, which has already been referred to, is to reduce the deficit in public expenditure by transferring costs from the public purse to the private purse. As has been pointed out in this House by the noble Baroness, Lady Sharp of Guildford, the supposed saving is purely an accounting trick to get costs off the balance sheet. There is no long-term saving to taxpayers. The second motive is to create a market-or supermarket, as the noble Lord, Lord Giddens, said-with students browsing as customers and universities responding by diversifying and improving their product range.
I happen to support greater diversity among higher education institutions, but is the market really a market? It turns out that many universities will charge the same £9,000 fee, so the market is not as diverse as the Government had hoped. At the same time, it is not a free market but a tightly regulated market, in terms of price, numbers and the distribution of the customer base. In short, the policy is a muddle.
As the noble Lord, Lord Giddens, has already mentioned, the arrangements will have unintended consequences. Let me give you an example. The Government have said that they are keen to encourage more students to study science, engineering and mathematics-the so-called STEM subjects-but do not forget that those degrees take four years to complete and, therefore, the new arrangements with £9,000 a year loans will very likely discourage people from studying them. As I have discovered in my own university, for those universities that charge £9,000, because of the way in which the HEFCE funding formula works and in spite of the premium of STEM subjects, there will be a shift away from funding STEM subjects towards the humanities. I would like to ask the Minister whether those consequences are regarded as positive benefits of the new arrangements for funding.
The White Paper, published earlier this year, is remarkably quiet about graduate students' education. Another unintended consequence that I can envisage is that students, finishing their undergraduate degree in a STEM subject, with perhaps £45,000 worth of loan, will not be encouraged to go on and take a postgraduate degree, which is essential for many of the jobs that we need to fill in science, engineering and other technical subjects. Does the Minister agree that the new arrangements will have knock-on effects for postgraduate education? Can she explain, more generally, what the Government's approach to postgraduate education is in light of the new arrangements?
I now want to turn briefly, as it has already been mentioned, to the subject of international students. I speak with a personal perspective here because my father was an immigrant to this country as an academic and went on to win a Nobel Prize. He also contributed hugely to UK scientific research. We have already heard that UK universities are significant contributors to exports-Universities UK estimates a figure of £5.3 billion in 2007-08. In my own university, Oxford, 32 per cent of the teaching staff, 47 per cent of the research staff and more than 52 per cent of graduate students are from outside the United Kingdom. Our fastest growth area is for graduate students from China and India. That mobile talent comes to the UK because of the outstanding reputation of our universities. Not only do they come here to be educated, but, when they go home, as the noble Lord, Lord Giddens, said, they exercise great influence in their own countries, which can lead to future trade links of immense benefit to this country.
However, the present immigration controls and settlement restrictions under consideration will do great harm to the competitiveness of our universities. Recent figures from the Russell group suggest drops of between 20 and 80 per cent in the numbers of applicants from Asian countries. Our competitors in other countries are absolutely delighted that we are shooting ourselves in both feet by making it harder for our great universities to attract overseas talent.
I close by quoting from the former Poet Laureate, John Masefield, who once said,
"There are few things more enduring than a University. Religions may be split into sect or heresy; dynasties may perish or be supplanted, but for century after century the University will continue, and the stream of life will pass through it, and the thinker and the seeker will be bound together in the undying cause of bringing thought into the world".
I hope that the current Government will support, rather than destroy, these enduring institutions.