Scottish Solutions Inquiry

– in the Scottish Parliament at 3:25 pm on 17 March 2004.

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Photo of Murray Tosh Murray Tosh Conservative 3:25, 17 March 2004

The next item of business is a debate on motion S2M-1043, in the name of Alasdair Morgan, on behalf of the Enterprise and Culture Committee, on the committee's report on its Scottish solutions inquiry.

Photo of Alasdair Morgan Alasdair Morgan Scottish National Party

In January last year, the Government at Westminster published its white paper on higher education. The white paper contained, among other things, proposals on how research would be conducted and funded at English universities, and on how greater access could be achieved. It also proposed variable-rate tuition fees.

At the time, there was significant concern in Scotland that the result of the proposals would be to alter significantly the competitive balance between Scottish universities and those south of the border to the detriment of Scotland. After the election last year, when the Enterprise and Culture Committee was formed, its members were willing to undertake an inquiry into some matter of importance as soon as possible. Fortunately, the nature of the committee is such that, although we have a wide remit—perhaps the widest of the parliamentary committees—we have the compensating advantage that we are not heavily burdened by much in the way of legislation.

Another reason for choosing this topic for our inquiry was that all the parties involved in the committee had, in the election that had just taken place, ruled out tuition fees as a method of funding Scottish higher education. We therefore felt that we could approach an inquiry into the topic with at least some measure of policy agreement among the various members of the committee. We reported unanimously last December and the Executive has now responded to our report. In addition, the Executive has published phase 3 of its higher education review.

At this stage, it would be appropriate for me to thank all those who participated in the inquiry—either by submitting written evidence, of which there was a substantial amount, or by giving oral evidence. I would also like to thank the clerks and the researchers from the Scottish Parliament information centre; their assistance in the production of the report was essential and invaluable.

We reached our conclusions against a background of some uncertainty. No one who reads the white paper would disagree that, in some crucial areas, it is fairly short on detail. We delayed the final consideration of our report in the hope that the Higher Education Bill would be published prior to the publication of our report and could therefore inform our conclusions to some extent. As it turned out, the Government decided to delay publication until January, so we decided to go ahead anyway and publish our report in December. We did so in the hope that it could influence—although perhaps "inform" would be a better word—the debate at Westminster. To that end, I sent copies of our report to all MPs in Scotland.

I will try to cover the most important areas of our conclusions, starting with some issues of process. The white paper, as distinct from the bill, dealt with issues that were clearly English and Welsh but that had the potential to have a significant impact on matters in Scotland that are devolved to this Parliament. The committee felt that the introduction of a white paper with such a material impact on matters within our control, without the Government having engaged in dialogue with the Scottish Executive, reflected badly on the lack of communication between the Administrations north and south of the border.

In its response to our report, the Executive acknowledges the impact of the white paper in Scotland and acknowledges the need for closer and more regular consultation between the two Administrations. I note also that a UK parliamentary liaison team has been set up in the UK Government. We look to see some benefits flowing from that in the form of better communications. Clearly, only time will tell how effective it is, but the need for such an arrangement is clear.

The committee highlighted Scottish research competitiveness as potentially most at risk if there is significant additional funding for higher education in England. We heard about the development of long-term collaboration in research in Scotland, and welcomed that approach and the support offered by the Scottish Higher Education Funding Council. Good-quality facilities and a critical mass of world-class researchers can only strengthen our international reputation and our ability to attract and retain researchers. However, the recruitment and retention of high-quality research staff will become increasingly difficult if the problem is not addressed.

In addition, there are far too many contract researchers. At 46 per cent, the proportion of contract researchers is higher in Scotland than it is in the rest of the UK, where it is 42 per cent. We recommend that universities explore collaborative approaches to providing career paths for those researchers. The HE review seconds that approach. Only a couple of weeks ago I was talking to a young researcher who is in the third year of his third three-year contract. Needless to say, much of his attention and energy was focused more on how he could ensure his own future after the termination of his current contract rather than on the business of the contract itself. Surely that is no way to incentivise some of our brightest and best people. We look forward to seeing developments in that area.

We all agree that our universities need to continue to provide high-quality education not only to young Scots but to people from outwith Scotland, who enrich the quality of our education system when they are here. Some stay to make a permanent contribution to this country, and others leave and, we hope, take some good messages about Scotland with them.

Although we now have some evidence on cross-border flows of students from the phase 3 review, the committee's view is still valid. Our view was that the evidence on how student flows will react to what is essentially a proposal for postgraduate payments—it might not be perceived as such—is not at all clear, so it is too early to predict how the flows might change as a result of what happens in England. However, it is clear that they need to be monitored closely.

The report was clear that there is a need for significant additional investment in higher education in Scotland to maintain the competitiveness of the sector and of the nation's economy as a whole. We felt that it would not be appropriate to put numbers on that investment, but we hoped that the work that was being undertaken for the HE review—which has been published—would provide some data to help that calculation.

We acknowledge that the sector itself can contribute to providing some of that investment by increasing its intake of endowment funding, by increasing its links with businesses and by operating more effectively within the sector to achieve economies of scale. Indeed, we acknowledge that the sector is already doing many of those things. However, at the end of the report we concluded that, however well the universities do in that respect, the Executive will have to significantly increase in real terms its investment in higher education.

The Executive's response to our report relied heavily on the outcomes of the third phase of the higher education review. That review gives few figures, but two that stand out are the estimates of the £30 million that is required to modernise pay policies and adequately reward academic staff, and the £450 million that is needed for investment in university buildings and estates. That is a total investment of nearly £500 million, which could certainly be described as significant but, in addition to that, we need much more money to address the effects of the Higher Education Bill.

The committee examined two other issues, which I hope other committee members will pick up on. One of them is the importance of further education colleges, which are a key element in our unique Scottish system and which deliver a significant amount of higher education provision in Scotland. The other issue is the lack of support for part-time students, who still have to pay fees, unless they are on very low incomes indeed. In the context of an aging work force, we need to ensure that as many people as possible are encouraged to use learning as a route to a better standard of living.

Finally, the committee awaits the outcome of the spending review with interest. We are keen to see how the Executive responds to the report in monetary terms. Although we started off our inquiry by optimistically giving it the title "Scottish solutions", I am conscious that in recommending increased funding for the higher education sector from the Executive, we have perhaps not provided the entire solution. The Executive has a challenging task, because its revenue stream is largely predetermined.

The Government proposals south of the border may have short-term Barnett consequentials, as the Government pays top-up fees to English universities prior to the graduate repayment of those fees kicking in some years down the track, but whether those consequentials will have any net effect on the Scottish block will depend on the totality of Government spending in devolved areas and not simply on the higher education budget. Therefore, any increase in funding such as that for which we are calling may well have to be met by decreased funding elsewhere. However, the committee was in no doubt that investment in higher education is not only expenditure but investment in our future.

Investment in higher education will not necessarily bear fruit within the electoral cycles within which almost all politicians of almost every party are too often guilty of working. However, there is no doubt that in the medium to long term, that investment will bear significant fruit for Scotland and its economy. Our report recognised Scotland's strengths, which include

"its wider accessibility; its closer links between the further and higher education sectors; its traditions of excellence and achievement; and its long history of providing useful knowledge to society."

It is vital that those strengths are supported and that we continue to drive for excellence.

I have great pleasure in moving the motion in my name on behalf of the committee.

I move,

That the Parliament notes the 3rd Report 2003 (Session 2) of the Enterprise and Culture Committee, Report on Scottish Solutions Inquiry (SP Paper 67), on the potential impact of the introduction of variable tuition fees in England and recognises the importance of a healthy higher education sector to Scotland's economic development.

Photo of Jim Wallace Jim Wallace Liberal Democrat 3:36, 17 March 2004

I am pleased to have the opportunity to discuss the Enterprise and Culture Committee's report on its Scottish solutions inquiry, which was published last December, and to thank Alasdair Morgan, the convener of the committee, for the fair way in which he has represented the report to members this afternoon. In his conclusion, he reminded us of the wider strengths of Scottish higher education.

Alasdair Morgan's speech was a reflection of the committee's report, which was thoughtful and wide ranging. I will say a word in a moment about its detailed findings, but I want to point out that much of what the committee said is shared by all members. I hope that our universities and colleges take heart from that shared commitment to higher education in Scotland. Our higher education is world renowned; I believe that we are capable of competing with the best. We do not underestimate for a moment the serious challenges that lie ahead, but our institutions still provide vibrant intellectual communities and they are excellent places in which to study, learn and work. Above all, the message that needs to come through from the debate is that all of us truly want Scottish higher education to continue to be a magnet for talented people and that we must find a way in which to have a robust debate about the future that does not lead us to undermine that strong starting position.

Let us be clear that we have an excellent track record on funding for higher education, which has increased by a third since devolution. Critically, today's funding announcement by the Scottish Higher Education Funding Council has been made possible by our decision in the previous spending review to raise investment in higher education even further.

Photo of Murdo Fraser Murdo Fraser Conservative

Will the minister confirm that, even given the announcement today, since the Administration came to power in 1997-98, funding per place has fallen from £5,123 in 1998-99 to £5,012?

Photo of Jim Wallace Jim Wallace Liberal Democrat

This Administration did not come to power in 1997-98; it came to power in 1999. The number of people who go into higher education has expanded by 50 per cent. It is important that, as SHEFC announced today, its budget will cross the £800 million mark for the first time. That means that funding for research and knowledge transfer will increase by 11.6 per cent. Within that, SHEFC will raise the funding for knowledge transfer by almost 50 per cent to £9.5 million, which is indicative of our commitment to get research out of laboratories and into the wider economy.

We are also committed to increasing the quality of the learning experience, which is why grants for teaching will increase by 3.4 per cent, which is more than the current rate of inflation. To reflect further on Murdo Fraser's point, I point out that, importantly, that is an increase of 3.4 per cent without an increase in the overall teaching load. Quite properly, we are investing in quality rather than expansion. We are on track to make good our partnership commitment to increase the higher and further education budget by 16 per cent by 2006.

To look further ahead, the First Minister and I have expressed our absolute commitment to maintain Scottish higher education's competitive edge. We have said so on many occasions and I am glad to have the opportunity to say it again today. In responding to the phase 3 review, I highlighted that the Executive had taken the very unusual step of committing to additional resources in the spending review.

Photo of John Swinney John Swinney Scottish National Party

Will the Deputy First Minister explain to Parliament in great detail and with great precision exactly what he means by his commitment to maintain the competitive advantage of the higher education sector in Scotland? I have one definition of that, and I am sure that Universities Scotland has another, but I would like to know what the Deputy First Minister's is.

Photo of Jim Wallace Jim Wallace Liberal Democrat

We have got it just now and we want to keep it. People recognise that Scotland has a competitive edge. The current increases in research funding from the funding councils perhaps offer the simplest comparison. Many comparisons between England and Scotland can be confused by the use of different formulas. The announcements for 2004-05 show that, in recurrent research funding from the funding councils, the increase in England is 3.9 per cent whereas the increase in Scotland is 10.5 per cent. I am pleased that that commitment to higher education is reflected in the committee's report. There is a great deal of common ground between the committee's work and what the Executive has been saying.

I welcome the committee's measured approach and the recognition that it would be inappropriate to have a knee-jerk response to the developments down south. As Alasdair Morgan fairly pointed out, we waited some time to get the bill from the UK

Government. We need to take the Scottish system forward in ways that will meet our needs here in Scotland and which, as the committees said, work with the grain of Scotland's distinctive traditions and inheritance. As the Executive's response made clear, it agrees with the committee on many points.

Photo of Alex Neil Alex Neil Scottish National Party

Does the Executive now accept that there is no 20 per cent gap in spending per head between Scotland and the rest of the UK? There is not even a 3.6 per cent gap any longer, as that figure is three years out of date. Does the minister accept that there is now no competitive gap between north and south of the border in spend per head on higher education?

Photo of Jim Wallace Jim Wallace Liberal Democrat

What has been made clear is that what the Higher Education Funding Council for England invests in higher education takes into account different factors from those that are taken into account in SHEFC's contribution to higher education in Scotland. We still have an edge over England, but it does not advance the debate to trade statistics in that way. We want recognition that Scotland has a competitive edge—I have mentioned a simple comparison, which is investment in research. We punch above our weight in research in many ways. That is the kind of competitive edge that the Executive wants to maintain, and it is why the work of the higher education phase 3 review allows us to consider those issues in the spending review. It has not helped overmuch to concentrate on statistics, when what we want to ensure is that Scottish higher education continues to thrive and prosper.

Photo of John Swinney John Swinney Scottish National Party

The point that Mr Neil has just made emphasises the question that I posed. How can we say that we will protect the competitive advantage of Scotland if we do not define what Scotland's competitive advantage happens to be. That is the nub of Mr Neil's point. I wish that the Deputy First Minister would give members a definitive answer so that, in two to three years' time, we can hold him to account on whether he has protected that advantage.

Photo of Jim Wallace Jim Wallace Liberal Democrat

One way of considering that competitive edge is the particular importance of research to the future economic growth of Scotland. Scotland receives more in research funding per head of population than is received south of the border.

I can give a range of statistics to show that the relative expenditure in this area in Scotland and England can be calculated in different ways, but that will not help to move the debate forward. If the Parliament had given me more than 12 minutes, I would have been more than happy to make comparisons between the different funding formulas.

It is important to remember that the report of the higher education review concluded:

"This Review has not attempted to settle the detail of this question, beyond stating that there is broad agreement, across the whole HE sector, that for a country of its size Scotland is a relatively larger investor in higher education than England, with the corollary that outputs in terms of numbers of students catered for and levels of research activity are correspondingly higher. The important issue is to understand which elements of the system will be most vulnerable to pressure as funding levels improve in England."

That was the conclusion of a review that involved almost all the stakeholders in Scottish universities. The review found that Scotland has a higher participation rate in higher education and higher investment in research. As those factors are to Scotland's advantage, we are determined to preserve them and, where possible, to enhance them.

We share the committee's views in some areas, such as the fundamental role of higher education in the country's economic success. FE colleges play an important role in delivering higher education in Scotland—some 25 per cent of higher education is delivered in our FE colleges. Collaboration is of great value in the overseas marketing of higher education, in research and in the use of resources generally. We need to ensure that academic careers are attractive and well structured. Sources of funding should be broadened to maximise best value in public funding. The value of increasing further the links between universities and business should be considered.

On the specific issue of attracting overseas students, the Executive has announced significant developments as part of the fresh talent initiative since it responded to the committee's report. We will offer extra funding specifically to help institutions to collaborate more extensively on attracting and supporting overseas students, as the committee recommended. At the same time, we will introduce a new postgraduate scholarship scheme and a two-year visa extension for overseas graduates of Scottish universities from the summer of next year.

The committee said that the Executive must provide new funding as part of the Scottish response. It is clear that the Executive has gone much further on higher education than it has previously done at this stage of a spending review. It will examine the committee's evidence, the phase 3 review and the work of the stakeholder groups. The phase 3 review makes a considered and persuasive case for investment in Scottish higher education.

I acknowledge, as Alasdair Morgan did, the committee's comments on the Executive's relationship with the UK Government. The publication of the white paper highlighted the need to strengthen communications and we have done that.

I am grateful for the committee's endorsement of the open and inclusive approach that we took in conducting the phase 3 review. The review's report provides clear evidence of the challenge that we face in improving the higher education estate, especially the teaching estate. The scale of investment that is required is considerable. Institutions, as well as the Government, will have to be imaginative in considering options. Collaboration, private investment and the release of property holdings may need to be considered.

I wish to highlight a key area in which an early decision is needed: how we manage cross-border student movement from 2006. The convener reiterated today the committee's request for us to monitor data from the Universities and Colleges Admissions Service. We will do that. The phase 3 report mentions that signs of the potential for increased pressure on places in Scotland are clearer than before.

We will always value the fact that our higher education institutions draw to Scotland students from around the UK, the rest of Europe and the rest of the world. That will not change. The Executive's first priority and primary responsibility must be to protect the interests of students domiciled in Scotland, wherever in the UK they choose to study. We are determined that such students should not be disadvantaged as a result of changes in the rest of the UK.

The phase 3 report makes it clear that as radical changes are implemented in England, all aspects of the arrangements that underpin cross-border movements will need to be re-examined. The assumptions on which the systems are based will no longer hold true from 2006. The picture is much clearer than it was a year ago. Phase 3 of the HE review highlighted that we will have to move quickly on cross-border issues. Therefore, I have asked officials to look closely at this area so that by early summer we can give certainty and reassurance to young people who are making choices about the future. In other words, that will be done well ahead of the spending review.

I wish to discuss the sources of income that are available to institutions, which is an issue that emerged from phase 3 and which was mentioned by the committee. Without being unrealistic, we should work with the sector to help to identify all potential sources of income and to share best practice. We are in the process of commissioning further research into the experience of institutions in the rest of the UK, to identify areas where different types of institution have been particularly successful at growing their external income in recent years. On St Patrick's day, I congratulate the University of Aberdeen on the £1 million endowment that it has received to establish a chair of Irish and Scottish studies, which was a gift from Dr Lewis Glucksman and his wife, from New York.

I welcome the committee's report and the opportunity to debate it. We have a strong track record in higher education, which has enjoyed support not just from the Executive but from the Parliament. We should build on that and ensure that our universities continue to be attractive and successful. We recognise the challenge of competition not only from England but internationally. I know from the many visits that I have paid to universities and higher education institutions that we have talent and a track record here. I hope that we will hear during the debate that Scottish higher education enjoys the support of the whole Parliament and that we can face the challenges ahead with confidence.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party 3:50, 17 March 2004

I, too, pay tribute to the Enterprise and Culture Committee. The debate is important and timely. The committee's report is comprehensive and it is important that it goes wider than just analysing the top-up fees issue. I reiterate the position of the Scottish National Party: regardless of the implications of top-up fees, we must address comprehensively the future of higher education funding.

In the spirit of St Patrick's day, just as the minister acknowledged the University of Aberdeen's endowment, we should acknowledge the honour given to Irishman Bernard King of the University of Abertay Dundee and his contribution to higher education in Scotland.

The committee has served the debate well. It provided a political lead early in the second session of the Parliament and filled the vacuum that the Executive had left. Its report was issued to every Scottish MP before the Westminster debate on the Higher Education Bill. We were led to believe that the phase 3 review report would be key. It turns out that it is a comprehensive collection of data and includes useful information and makes recommendations, although the fact that the participants produced an alternative website is worrying. The problem is that we have not yet had a response to it from the Executive. The Executive bends over backwards to make statements and have debates about other people's reviews, but on the issue of higher education funding we are yet to hear about its own policy and review. I acknowledge the fact that the issues are complex, the challenges are big and the implications are manifold, but hiding from the problem does not help to address it.

The committee acknowledges in its report that top-up fees will have an adverse impact. There has been speculation that a huge Barnett windfall will come to Scotland as a result of what is happening in England. The phase 3 report states that although £1 billion will be generated in top-up fees income for universities in England, it is likely that we will have only a £30 million Barnett consequential here. It would be useful if in summing up the minister could indicate that at least that amount will be invested and that the Executive will not steal it away to put in another area.

I am rather bemused by the Executive's announcement today of already-announced research money for universities. I understand that SHEFC was due to make the announcement on Friday, but that was delayed in order for the minister to announce the proposals today. I welcome the moneys—which were announced previously. The budget day announcement of a 3.4 per cent increase in funding for higher education teaching might be buried in today's news release, but it is of concern, given that we are in a period of industrial dispute and even the university principals acknowledge the pay problems that university staff face. I doubt whether the 3.4 per cent increase will give universities the room for manoeuvre that they need over the coming year to address the problem. I am concerned that the minister is not addressing the key point.

Today should not be about lulling the public into a false sense of security that something new is happening, because so far today we have heard nothing new from the minister. We acknowledge that resources are going into higher education, but we want to address the pace of investment. How can we ensure that we remain competitive if we do not know from what basis we are starting? The rate of increase in investment in England is double that here. The Scottish Executive spend from the Scottish block is increasing by 23.29 per cent in the current period 2002-03 to 2005-06, yet the SHEFC spend for that same period is increasing by only 14.8 per cent, which is a below-average increase compared with the increases for other departments.

In a sense, the Parliament is as guilty as the Executive is in this regard because, in the previous session, we allowed the issue of tuition fees to overshadow the rest of the debate about higher education funding. It is as if we assumed that, because we had dealt with tuition fees, we could tick the higher education funding box. However, that was not the case.

Photo of Jamie Stone Jamie Stone Liberal Democrat

Can I take Ms Hyslop's words as an admission from the Scottish National Party that we have indeed dealt with tuition fees? If so, that is the first time that that party has admitted that.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

We have always recognised that the Executive dealt with tuition fees. The problem is that it did so by moving them from the front end to the back end.

I hope that Jamie Stone takes my point seriously. The fact that we focused on tuition fees perhaps meant that, collectively, we ignored the wider issue of higher education funding. If we can get a consensus on that point, we can perhaps move forward. We have to allow the minister to break out of the bunker mentality, because there is a stark choice for the Executive: plan for success in this decade or prepare for crisis management in the next.

The committee report acknowledges that there have been many successes. The points that are made about participation and the role of further and higher education are key and some important recommendations are made. We do not need foundation degrees, which they have down south, because we have a robust and successful further education system.

We have to address the issue of research. If Conservative MSPs want to be taken seriously, they should ask the English Tory MPs to stop attempting to remove provisions from the Higher Education Bill that are relevant to Scottish ministers. That cannot be squared with Peter Duncan MP sitting on his hands. That is hypocrisy.

On research, how much should the minister direct universities and how much autonomy should universities have?

We can make progress on the policy of creating a smart, successful Scotland. Yesterday, I spoke to Norwegians who talked about the policy of giving tax breaks to companies that have fewer than 50 employees and which invest in research and last week, Irish visitors told me that they viewed education as being vital to their economic success. We can reach a consensus on this issue, but we must acknowledge the position that we are starting from. If we want to be competitive, we must tackle this issue seriously and look to the future. Instead of managing higher education as a problem, we should grasp it as an opportunity.

Photo of Murdo Fraser Murdo Fraser Conservative 3:57, 17 March 2004

I start by echoing the thanks that the convener gave to other members of the Enterprise and Culture Committee for the constructive way in which they approached the report and to the committee clerks for all their hard work and assistance in the inquiry that led to the production of the report.

The committee's inquiry was thorough—we took evidence from all the major stakeholders in Scottish higher education. Furthermore, the report was unanimous, as it was supported on a cross-party basis by all committee members. In light of those facts, the report must be seen as an authoritative statement of where Scottish higher education stands in relation to the threat of top-up tuition fees south of the border.

The report makes a number of serious criticisms about the relationship between the Scottish Executive and the UK Government. One of the consequences of devolution is that we will have Administrations of different political persuasions north and south of the border that will have to learn to work together. At the moment, we are in what might turn out to be a unique situation, in that the same party is in power north and south of the border, although it is governing in coalition north of the border. If we cannot get the two Administrations to work together in that situation, how much harder will it be when, as will inevitably happen, two different parties are in power? The committee sensibly recommended that new protocols and practices should be developed to address those concerns.

In considering the level of funding of higher and further education in Scotland, the committee recognised that, even if top-up fees were not introduced south of the border, there would be an argument for further investment. As the Deputy First Minister acknowledged, it is worth noting that funding per student has fallen since the advent of this Administration. In 1998-99, funding per student was £5,123 but, last year, it had fallen to £5,024. The figures that have been announced show that funding per student will fall still further to £5,012. That is a continuing decline and the figure is now less than it was under the Conservatives.

I accept that, as a percentage of our gross domestic product, we spend a fair amount on higher education. However, the percentage of students in Scotland is higher than it is in the rest of the UK, which means that the figure per student is not quite as impressive as the headline figure.

Photo of Alex Neil Alex Neil Scottish National Party

The member makes a point about the spend in relation to the rest of the UK, but when we consider competitiveness we should surely compare ourselves with a much wider range of countries, particularly those in the Organisation for Economic Co-operation and Development. We spend about 20 per cent less per student than our OECD competitors. Does the member think that we should increase our spend to be able to compete with those countries?

Photo of Murdo Fraser Murdo Fraser Conservative

Alex Neil makes a fair point. The SNP is fond of citing the Irish example as a panacea. Ireland spends much less on higher education than we do, but that does not seem to affect its economic performance. However, the general point is interesting.

The committee is unequivocal on its key point. Paragraph 147 of the report says:

"the proposals in the White Paper, if implemented in their current form, will have an adverse impact on Scottish higher education, particularly on its research sector."

That, in a nutshell, is what the report is about. Top-up fees will result in an additional income stream for higher education in England. If top-up fees down south cannot be halted, we have to find additional funds for Scottish universities to make up the difference.

The Executive has been slow to respond to the concerns of not only the committee but the higher education sector as a whole. In the debate on 22 January, referring to the phase 3 report of the Executive's higher education review, the Deputy First Minister said:

"it would be wrong to prejudge that report or have a knee-jerk reaction to it before we have seen it".—[Official Report, 22 January 2004; c 5055.]

At First Minister's question time on 15 January, the First Minister said that the phase 3 review would report in February and added:

"we will act very quickly thereafter."—[Official Report, 15 January 2004; c 4874.]

We now have the phase 3 report, but we still have no clear proposals from the Executive on what it will do about it. When I asked the First Minister about that at First Minister's question time last week, he replied:

"We are currently considering the report and intend to publish our initial response shortly."—[Official Report, 11 March 2004; c 6573.]

The dithering on the part of the Executive is not good enough.

Photo of Jim Wallace Jim Wallace Liberal Democrat

Will Murdo Fraser acknowledge that I have made it clear on countless occasions that, in relation to additional funding, the substantive response to the introduction of top-up fees down south, and indeed to the phase 3 review, must come as part of the spending review. Would he care to consider how many times he has heard me say that? It is not a question of dithering at all. We are taking a measured approach in the context of the spending review, which is the correct context in which to consider the issues.

Photo of Murdo Fraser Murdo Fraser Conservative

The Deputy First Minister may have been consistent in his view, but on 15 January the First Minister said:

"we will act very quickly thereafter."—[Official Report, 15 January 2004; c 4874.]

We are still waiting.

It is wrong for the Executive to suggest that the Higher Education Bill will have an impact in Scotland only from 2006-07. Academics and lecturers might already be looking at their prospects; they might be tempted to leave posts in Scotland in order to get a sharp pay rise if they go down south in two years' time. Moreover, students who will begin university in the academic year 2004-05 might be persuaded to apply to English institutions, as those universities might be better funded when those students are in their final years of study. Conversely, there might be increased pressure on places at Scottish universities as students seek to avoid paying top-up fees at English universities. All those things are starting to happen already, which is why the Executive must act quickly to allay the concerns of people in the sector—it must issue its response and deal with those concerns.

We must ensure that Scottish students are not penalised. The First Minister has said that the Executive will rule out fees, but he has not ruled out an increase in the graduate endowment. Whether the graduate endowment is a fee, a contribution, a tax or an endowment, what Scottish students want to know is that they will not be asked to pay more for their education as a result of the First Minister's political colleagues at Westminster.

The problem has been created by a Labour Government at Westminster that did not pay sufficient attention to Scottish higher education and the impact that its actions would have. It is up to the Labour and Liberal Democrat Executive to try to resolve the issues. The report demands a serious and intelligent reply from the Scottish Executive and we are waiting for one.

Photo of Richard Baker Richard Baker Labour 4:04, 17 March 2004

At least the committee has given a serious and intelligent reply.

When the Enterprise and Culture Committee was considering the impact of top-up fees south of the border, we were talking about a situation that we might have to deal with. Now, however, we are talking about a challenge that we have to rise to. I am pleased that the Executive has made it clear that it will not introduce top-up fees and that it is determined to ensure that our universities are not disadvantaged by the changes down south. I commend to the Executive the recommendations in the report, which, if implemented, would contribute to ensuring that higher education in Scotland maintains its current high standard of being among the best in the world. Whatever the debates are, that should not be a point of discussion.

The whole committee agreed about the importance of maintaining Scotland's excellence in higher education provision in universities and colleges, where we are ahead of the game in giving people access to higher education. Colleges' contribution must be recognised.

As we have heard, agreement is perhaps not as great over the competitive advantage that Scottish universities have. However, we heard evidence that acknowledged that Government funding for universities in Scotland is better than that in England. The Executive's commitment to increasing higher education sector funding from £600 million in 1999-2000 to more than £800 million in 2005-06 is clear. By any measure, that is a significant investment increase.

We have heard that the rate of participation in higher education in Scotland is higher than that in England. England is following our lead on student funding by providing bursaries for poorer students. We are experiencing success in encouraging people from all backgrounds and parts of society to continue in education. We need to work to preserve those successes.

Photo of Alex Neil Alex Neil Scottish National Party

Does the member accept that a narrow definition of funding has been used in comparisons of English and Scottish universities? For example, the Defence Evaluation and Research Agency spends nearly £450 million a year on research—£2 million of that comes to Scotland and the rest goes south of the border. When we bring in a wider definition of UK Government spend on research, we are diddled and fiddled right, left and centre.

Photo of Richard Baker Richard Baker Labour

I suspect that the diddling and fiddling is in Alex Neil's statistics. I heard his comments about OECD comparisons. Our OECD comparisons on gross domestic product are good, so I will treat his statistics with some dubiety.

The report outlines the concern that the funding advantages that we afford our universities could be eroded. The fear is that higher pay might lure some of our best academic staff south. That discussion takes place while the Association of University Teachers throughout the UK is campaigning for fairer pay and conditions for staff whose rates of pay have not kept up with those of comparable professions.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

Does the member acknowledge that one concern about that dispute is that local pay bargaining may be introduced, which could undermine the pay of lower-paid staff in England? That would necessarily have a knock-on effect in Scotland.

Photo of Richard Baker Richard Baker Labour

The report refers to national pay bargaining, which could help to prevent some staff from going down south. I commend to the Executive the committee's recommendations on staff recruitment and retention and particularly its recommendations on short-term contractors, to which Alasdair Morgan referred. Dealing with that issue could keep some of those staff here.

I was encouraged by what the minister said about examining cross-border student flows. I am especially interested in what we will do to address the impact on students from Scotland who wish to study in England, because they could face costs, too.

During the inquiry, we heard that what stands Scotland in good stead for keeping excellent research in Scotland are the research communities that we have developed. Biomedicine research at the University of Dundee is an example of our success. Moreover, the University of Aberdeen today announced plans for a new state-of-the-art health research facility. If we want to have a knowledge economy and to capitalise on innovation, we must allow universities to keep that research in Scotland. That is why the report calls for increased funding and why it says that any Barnett consequentials that flow from the new investment down south should be prioritised for higher education.

The minister referred to communication. I regard devolution in the UK as the best and the right constitutional settlement, but it has become clear to me from what has happened that each Government in the UK should consider the impact of its decisions on the rest of the UK and not take decisions in isolation. Ministers should consult their colleagues in other Administrations fully when such decisions are being made. I am pleased that progress is being made on that.

The Executive has every right to be proud of its record on funding higher education and on expanding access. The goal is to maintain Scotland's competitive advantage. I have heard today about stark choices and a supposed delay in response, but the unrealistic, knee-jerk, impractical and unworkable responses from some are in stark contrast to the considered response in the committee's report. Not until 2006 will even some of the top-up fee income be received in universities down south.

The First Minister has made it clear that Scottish Labour is the party of enterprise and that an enterprising economy needs a successful higher education sector. We are at an important juncture in determining higher education funding for the future. We must maintain high participation and equality of access must be key. Most of all, we must ensure that our universities have the right funds to deliver high-quality education and research. I hope that the recommendations in the report will play a key part in determining future policy. I commend them and the motion in the convener's name to Parliament.

Photo of Alex Neil Alex Neil Scottish National Party 4:10, 17 March 2004

I congratulate the committee on taking up the recommendation in the Enterprise and Lifelong Learning Committee's legacy paper to make this issue a high priority. The committee's report is of a high quality, unlike the Executive's, which was one of the poorest that I have ever seen and one of the biggest damp squibs, although there have been a few damp squibs from the Executive during the past four or five years.

The Executive's phase 3 report is called "The Competitiveness of Higher Education in Scotland" and it purports to consider the competitiveness of our university sector. The words "Europe", "European Union" and "OECD" do not appear in it, however; the report makes only a parochial comparison with what is happening south of Hadrian's wall. Does the Executive live in a little parochial kailyard and think that our universities relate only to what happens south of the border? Does it not realise that our universities must compete internationally and globally?

We should compare ourselves not just with what happens south of the border, but with what happens in Europe, North America and particularly the far east and Asia. If we are to be competitive in teaching or in research, we must acknowledge that much of the competition is not south of the border, but in those other parts of the world. A serious, well-researched report would have pointed out that our competitiveness in teaching and research is under serious threat and has been chronically underfunded by successive Tory and Labour Governments, as a result of which many other countries have caught up and are exceeding our performance.

We need only consider the average OECD figures. It is not just Scotland that is lagging behind; I admit that England has lagged behind even further in terms of spend per head or percentage of gross domestic product spent on universities. In order to catch up, let alone get ahead of the game, we will have to invest substantially more—both north and south of the border—in our education system. If we do not, universities in countries such as Singapore, Indonesia and Australia will continue to overtake us, as will universities in North America and our European counterparts. Let us forget the kailyard, get rid of the parochialism and consider the issues in a proper global and international context.

Once and for all, let us agree to put an end to the kidology that Scotland's universities are still getting more money per head than their counterparts south of the border. The committee stated that the Executive's claims of a 20 per cent differential are factually untrue. It estimated a differential in Scotland's favour of 3.6 per cent in the year 2000-01, which was three financial years ago. That competitive advantage no longer exists.

Photo of Lewis Macdonald Lewis Macdonald Labour

Will Alex Neil accept that the OECD ranks Scotland at number 3 in expenditure on tertiary education?

Photo of Alex Neil Alex Neil Scottish National Party

No, it does not, especially in relation to the universities. I will have to debate that point with the member when I have more time.

As I said in intervening on Richard Baker, we must consider the total Government spend on research. For example, Scotland gets £2 million for defence research when our proportionate share should be closer to £40 million to £45 million. I ask the Executive to stop fiddling the figures and face up to the reality that we are not spending nearly enough on our education system.

Photo of Murray Tosh Murray Tosh Conservative

No, you are in your last minute.

Photo of Alex Neil Alex Neil Scottish National Party

Sorry about that, Jamie.

There is no room for complacency. Every member present believes in creating a smart, successful Scotland, but we also need an ambitious Scotland. Our ambition should be not just to equal our neighbours south of the border, but to be among the best in Europe and the OECD countries. To achieve that, our universities and colleges will need real money. When we get the results of the spending review, I hope that we will see that money being made available.

Photo of Susan Deacon Susan Deacon Labour 4:15, 17 March 2004

I am grateful for the opportunity to participate in today's debate and to have been able to take part in the Enterprise and Culture Committee's deliberations on its report. I welcome the constructive contribution to the debate that was made by our committee convener, whose speech was somewhat more measured than that of the predecessor committee convener. I hope that some balance can now return to the debate.

Both the committee report and the Executive's higher education review have helped to move the debate on. We have developed a shared understanding of many of the issues and we have demonstrated a shared commitment to our universities and colleges. Equally, some very big issues remain to be addressed. I would go as far as to agree with Fiona Hyslop, who made the valid point that, in investing a great deal of time, energy and money in student finance, the Parliament has collectively taken its eye off the ball over the past few years because we have not considered the wider question of higher education funding. I hope that we can redress that balance in the period to come.

As Alasdair Morgan said in his opening speech, the backdrop to the committee's inquiry was the fact that, in the run-up to the Scottish Parliament elections, all major parties said that they were against top-up fees. I am pleased about that, but, although people have been quick to say what they are against, they must now be quicker in saying what they are for. We need to be specific about our proposals and how they will be paid for.

I found much of the Executive's response to the committee report disappointing. I absolutely appreciate that the specifics of funding must be determined in the context of the spending review, but I believe that ministers could have gone a little further—if not a great deal further—in engaging with some of the points that the committee made in its report. The Executive could have made some statements of principle and policy intent, even if it could not put precise numbers to such commitments at this stage.

Equally, I agree entirely with the minister that, in any area of policy, it would be quite wrong if we were to have a knee-jerk response to developments south of the border. However, there is a balance to be struck between giving a knee-jerk reaction and providing the kind of delayed reaction that we are now in danger of having. It is important that the Executive and the Parliament move quickly to develop and refine our thinking on, and funding plans for, the future of our universities and colleges.

Although there are immediate issues to be addressed, I hope that we can also raise our heads and look to the future. There is a danger that we will be locked into an ever more sterile exchange of statistics on funding at the expense of discussing some of the wider questions and challenges that face higher education.

Just last week, I was privileged to take part in an event hosted by the University of St Andrews, which brought together a range of people, including representatives from the Executive, to look forward to the next 20 years and to ask what higher education should look like then. I cannot begin to touch on the range of issues that came up, but I subscribe to some of the thoughts that were expressed about lifelong learning, for example.

I hope that we will move to a situation in which lifelong learning is not just the stuff of strategy documents and the rhetoric of policy makers, as is all too often the case at the moment. We have still not really begun to break out of the silos into which we box the learning packages that have been delivered in the past and that are still being delivered now.

In the future, lifelong learning will be a reality. People will move in and out of education right through life to a far greater extent than they do at present. There will be a far higher premium on things such as people skills, the capacity to think creatively and critically and the ability to engage in the complexity of the world in which we live. There will be a crying need for flexibility at every level to enable people to balance all the different aspects of their lives, such as family responsibilities—which might involve children or elderly relatives, of which there will be a growing number—and to fulfil the desire simply for a better quality of life.

Moreover, economic imperatives will increase and, I suspect, stand in the way of people participating in education on a full-time basis. I was disappointed by the comments on the issue of part-time students in the Executive's response to the committee's report. The Executive is still pondering the question and saying:

"We ... need to identify whether there are significant numbers or groups of such people and, if so, what type of additional support they need."

We know that significant numbers of people want to study on a part-time basis, using different models and modes of delivery. We must move beyond the analysis and get down to some of the practicalities that need to be delivered now and planned for tomorrow.

I urge the Executive to move quickly to firm up its position on some of the substantive issues that have been raised today and to give us the substantive response that the minister has promised. I urge ministers and all members of the Parliament when addressing the short-term issues also to think to the longer term—to the kind of education system, students and society that we want in the future. I hope that we can move on to that debate quickly.

Photo of Jamie Stone Jamie Stone Liberal Democrat 4:21, 17 March 2004

I express my thanks to my colleagues on the committee, the committee clerks and the Scottish Parliament information centre for the invaluable work that they have put into producing the committee's report.

Plainly, we should encourage and support the Scottish Executive in its endeavours to maintain the competitive edge that our universities enjoy. I am glad that Fiona Hyslop has joined us in that. When we last debated the issue—in January—she accused Jim Wallace

"of sleepwalking through the issue and of exhibiting complacency and arrogance".

I presume that my good friend Fiona was unaware of the existence of the phase 3 higher education review, which was instigated by Jim Wallace seven months previously. When he reminded her of that, she replied:

"I welcome the fact that the Executive has set up a private and secret review group."—[Official Report, 22 January 2004; c 5051.]

Presumably she was referring to such bodies as the Association of University Teachers, Universities Scotland, the Educational Institute of Scotland, the Association of Scottish Colleges, the National Union of Students and many others.

Photo of Jamie Stone Jamie Stone Liberal Democrat

Not MI5.

The committee's report is a useful and balanced contribution to the debate. I reiterate the point that I made in January: the position of the Scottish Executive as outlined in the partnership agreement is crystal clear. Read my lips: we will not introduce tuition fees in Scotland, as we oppose them in principle. That principle led us to abolish tuition fees in Scotland and has served Scottish students well since it was implemented.

I welcome the school council of Peebles High School to the gallery. All eight of our friends in the gallery are shortly to go to Scottish universities.

I say to some of the more negative contributors to the debate that we must not talk down Scottish universities. The world will not end if top-up fees are introduced in England. That is especially true if we consider the fact that in Scotland we are coming from a position of strength. Figures for spending on research from the funding councils clearly show English funding increasing by 3.9 per cent, while Scotland's funding will increase by 10.5 per cent. Facts are chiels that winna ding.

Unlike England, Scotland has achieved the target of getting 50 per cent of young people into further and higher education. It is clear that a significant proportion of the moneys that may be raised in England by top-up fees will go towards expanding provision, but in Scotland we have the ability to target future resources on quality, rather than quantity. I know that we are all knocking and pushing at an open door when we ask the minister to ensure that that persuasive case is made as strongly as possible during the forthcoming spending review.

Because of our support for higher education, spending has increased by a third since devolution. We are continuing to deliver on our promise to increase funding for higher and further education by 16 per cent by 2006.

Photo of Brian Adam Brian Adam Scottish National Party

The member is right to point out that all the parties represented in the Parliament—not just the Executive parties—are opposed to the introduction of top-up fees, but can he assure us that the Liberal Democrats will not be party to an increase in the endowment? The Executive parties and the First Minister have not yet made a commitment on that issue.

Photo of Jamie Stone Jamie Stone Liberal Democrat

I can give that assurance most emphatically.

We must be responsible and consider how best to deal with the £430 million that the review identifies as necessary to modernise our university estates. There would be benefit in considering the option of initiating a form of estates review for the university sector to consider how best to deliver the teaching, research and learning environment that we all want for our students and academics. The review would have to take account of the independence of our universities while recognising that innovative solutions, including increased collaboration among universities, will be needed to bring the estate up to scratch.

An estates review could consider such issues as whether savings could be made by restructuring back-office functions. It could also consider opportunities to share the best practice that is already undertaken in the sector. For example, further education colleges have made great strides to put themselves at the heart of their local communities and there might be similar opportunities for universities. I am talking about thinking outside the box while not threatening the independence of the institutions.

The committee's report is to be commended. We are now in the fortunate position of having the data that we need from the phase 3 review to ensure that the committee's recommendation of increased funding for the sector is backed up with hard evidence. We should support and encourage our ministers in their endeavours.

Photo of David Mundell David Mundell Conservative 4:26, 17 March 2004

As time is short, I begin with what I was going to say at the end of my speech. As the Deputy First Minister knows, institutions that are closest to the border always come under the most pressure from differential funding arrangements. He is aware of the concerns raised across the parties that funding in England will put pressure on the Crichton university campus in Dumfries to increase its funding, given the possibility of increased development in Carlisle. I make a specific plea to the minister in relation to the proposals that have been made for the library and learning resource centre on the campus. I repeat again the direct plea that, if any end-year flexibility funding is available, it should go into that project to assist it further. I know that the Deputy First Minister has taken a positive attitude to the project, which has been welcomed across the parties. The additional half million pounds of funding would be particularly welcome.

It is not for me to defend Alex Neil, although when he was convener of the previous Enterprise and Lifelong Learning Committee, he took the same reasoned approach that Mr Morgan conveyed today. It concerns me slightly when I find myself agreeing not only with Mr Neil, but with Susan Deacon, as I do today.

Photo of Jamie Stone Jamie Stone Liberal Democrat

Will Mr Mundell reflect with me on Mr Neil's comments on defence research? If Scotland were to become independent, there would be precious little more than two Cessna aircraft in the Scottish air force.

Photo of David Mundell David Mundell Conservative

I am sure that Mr Neil has said many things with which I do not agree, although when he was convener of the Enterprise and Lifelong Learning Committee, I always found that he kept such views to himself.

My concern about the current report is reflected in the year-long report that the previous committee carried out. The remit of the Parliament is to discuss a subject only when such lengthy committee reports have been produced. However, despite the length of time and the body of evidence that was taken that supported what Susan Deacon said about the need to support part-time education and to put further focus on further education, the previous committee's report seems to have disappeared off the map. Rather than focus on the big issues of how we see the future of further and higher education, we get diverted into the sole issue of funding or, as Susan Deacon said, into bandying about statistics.

We need to have a big debate rather than a conversation about what we see as the role of further and higher education. I am on the record as stating the need to encourage more people into vocational training and to take up the opportunities that exist in society, rather than being locked into the mindset that everybody should aspire to go into higher education on leaving school. That debate has begun to a larger extent in England. It is quite a different discussion from the discussion about access. There is quite widespread consensus, both in this Parliament and in the UK Parliament, that everyone who wants it should have access to higher education. However, the question remains as to whether higher education is the right choice for everybody. We should not continue to focus on the idea that everybody should go into higher education when a range of life choices is available—not least the choice as to when, during a truly lifelong learning system, people take the opportunity to have that education.

That is the sort of debate that we have to move on to if we are to meet everybody's aspiration not only of having a world-leading higher education system but of having an education system that meets Scotland's social and economic needs. If the debate focuses only on statistics, it will be a sterile debate and we will not have the economic basis that our country will need in 20 years' time or the range of talented young, middle-aged and older people. Let us not forget what is in the report, but let not forget either what was in the previous committee's report. An enormous amount of good work was done on the previous committee's report and it would be a great shame if it were simply put on the shelf and forgotten.

Photo of Murray Tosh Murray Tosh Conservative

I express my regrets to the one member whom I still had to call in the open debate, but I now have to go to the closing speeches. I call Christine May to close for the Labour party.

Photo of Christine May Christine May Labour 4:32, 17 March 2004

I join my committee colleagues in acknowledging the work of the committee and the stewardship of Alasdair Morgan. I also thank those who gave evidence and all support staff.

In the truncated time that is available to me, I want to say a little about the role of the further education sector in delivering our lifelong learning objectives. The sector's role was referred to in the committee report, a key recommendation of which said that

"the strategic importance of the further education sector should also be addressed."

Fifty per cent of young people may be going to university, but lifelong learning is about more than young people, and we also need to consider access for older, under-represented and more disadvantaged groups. That is why I want to concentrate on the further education sector.

About a third of places for full-time higher education in Scotland are accounted for by higher national courses, and that is the main route of access to higher education for many people from disadvantaged communities and for many vocational specialisations that are vital to the growth of the economy. We heard that in the evidence that the committee took. If we include part-time students, more than 50 per cent of Scots entering higher education for the first time now do so through an FE college. That is not matched in England—we have heard comments about that. Fifty-five per cent of those enrolments are on part-time courses, and I shall come back to that if time permits. Twenty-five per cent of HE students in colleges come from areas of high deprivation and 30 per cent of all HE graduates are from FE colleges.

That is a strong reason for examining all parts of the tertiary sector as a whole. Not only do the FE colleges support our universities, but they complement them in delivering courses locally to people who may not have the opportunity to travel to take up education. I look at the articulation agreements between universities and colleges and at the proportion of students going forward into universities, and I think of Glenrothes College in my constituency, which has a strong care faculty with links not just with local employers but with nursing and teacher training colleges. I look at the centre that it is developing for creative industries, and I think of the importance that that will have in relation to the Scotland's future economic needs. Glenrothes College also has a partnership with Fife College in Kirkcaldy to develop thinking and courses on information technology and engineering at the Institute of Applied Technology. Industry is also involved in that partnership.

The committee's report makes a number of recommendations. At this point, I must confess that I share other members' disappointment at the lack of developing thinking that seems evident from the Executive's responses to date. Although I acknowledge that the minister has to wait for the spending review before he can come forward with definitive proposals and numbers, I urge him to recognise that the chamber is anxious to know how thinking is developing and to find out about the conversations and discussions that are taking place with the trade unions, the universities, the colleges, the funding councils and so on. We seek reassurance that whatever comes forward will meet the need for additional resources that the committee report identifies.

I want to make two final points. The first is that, regardless of the issue of tuition fees down south, the recruitment and retention of staff, staff pay and conditions and so on must be dealt with and will require resources. Secondly—and finally—as a former lecturer in the FE sector and a former chair of the lowland Scotland objective 3 partnership, I remain passionately committed to the key role of lifelong learning in achieving the economic growth that Scotland needs. I am happy to work with ministers, universities and colleges to develop solutions that are affordable and implementable and that meet the needs of the sector—and, by implication, the Scottish economy. I make a plea to ministers to take us along with them as they have these discussions and to make regular reports back to us. If the minister assures us this afternoon that he will undertake to make those reports, I in turn assure him that he will receive my full co-operation. I am happy to support Alasdair Morgan's motion.

Photo of Lord James Selkirk Lord James Selkirk Conservative 4:37, 17 March 2004

I thank the Enterprise and Culture Committee for producing its excellent report on the Scottish solutions inquiry. The report sets out the current situation in Scotland and the rest of the UK and details the impact of the proposed implementation of top-up fees in England. Its recommendations are realistic, factual and up to date.

I must say that I sensed that a number of MSPs, including Christine May, Susan Deacon and Murdo Fraser, were uneasy at the lack of response to these matters. Perhaps of even more concern is the committee's conclusion that there was a lack of communication between the UK Government and the Executive on the impact of the white paper in Scotland. For example, paragraph 41 suggests that there has been

"a lack of communication ... with Scottish ministers" and goes on to say:

"The Committee considers that it is essential that in future the UK Government takes account of the potential consequences for Scotland of its proposals."

Obviously, we have to make devolution work and I hope that ministers in Scotland and at Westminster will take heed of that statement. When important changes such as those that the Prime Minister envisages are introduced, he must consider the impact that they will have in Scotland. After all, we are an integral part of the UK and our university sector is a truly integrated market with cross-border flows and exchanges of ideas. A good working relationship is essential and must not be forgotten.

Photo of Alex Neil Alex Neil Scottish National Party

If perchance the Tories were to win the UK general election in 2005, would they be committed to scrapping top-up fees before they are implemented in 2006?

Photo of Lord James Selkirk Lord James Selkirk Conservative

We have made it absolutely clear that we are against top-up fees and that we are very much in favour of Scotland maintaining its competitive edge. That is the position of the Conservative group in this Parliament.

Incidentally, the Deputy First Minister mentioned funding. In that respect, I must repeat the figures that Murdo Fraser highlighted. In 1998-99, funding for each place was £5,123; however, that figure will drop in 2004-05 to £5,012. As a result, we are right to be seriously concerned about funding issues.

Photo of Jim Wallace Jim Wallace Liberal Democrat

Does the member accept that the Scottish committee of the national committee of inquiry into higher education—the Dearing committee—which considered funding in the late 1990s, found that, between 1976 and 1995, the unit of resource for teaching in higher education institutions fell in real terms by 40 per cent? The Conservatives were in power for 16 of those 19 years. That was the Tory party's record: a 40 per cent real-terms reduction in the unit of resource for teaching.

Photo of Lord James Selkirk Lord James Selkirk Conservative

I am most amused that the Deputy First Minister included the years from 1976 to 1979, when a Lib-Lab pact existed and the Liberal Party, as well as the Labour Party, had a good deal more responsibility for funding than the Conservatives had.

The Deputy First Minister must face his own responsibility for the fact that funding per place has deteriorated and sunk in the past two years, which is why we are right to be extremely concerned.

The Enterprise and Culture Committee's recommendation in paragraph 146, which was supported by Alex Neil, Susan Deacon, Murdo Fraser and David Mundell, says:

"it will be essential to lever additional funds into the sector ... we believe that significant Executive funding will also be necessary."

I support that recommendation and I believe that Alasdair Morgan and Murdo Fraser are right to stress the great importance of research in Scotland in order to retain markets of the future and jobs.

I return to what the Deputy First Minister and Susan Deacon said about avoiding a knee-jerk reaction to changes in England. We agree, but it is false to say that the Higher Education Bill will have an impact on Scotland only from 2006-07 and that its full impact will not be felt until 2010. The fact is that academics and lecturers could be enticed to leave posts in Scotland now, with the prospect of a sharp pay rise in England in two years' time, and it is conceivable that such a pay rise might not be available in Scotland. The Deputy First Minister must address that serious matter.

Photo of Lord James Selkirk Lord James Selkirk Conservative

I have given way twice and I want to make one or two more points.

Top-up fees in England are likely to resolve the funding problem south of the border, but lecturers and academics in Scotland might not necessarily feel that they are in such a strong position. The First Minister said that the Executive would act very quickly when it received the report. Can the Deputy First Minister say what very quickly means?

Of course, I strongly echo the points that Alasdair Morgan, David Mundell and Christine May made about how further education must not be left behind. That is tremendously important.

To sum up, we strongly believe in advancement on merit rather than on the ability to pay, that Scotland should not be subjected to a brain drain, that Scottish universities should be independent of the state, but that those universities also need very strong state funding. I express my party's gratitude to the Enterprise and Culture Committee and I look forward to hearing what the Deputy First Minister has to say.

Photo of Brian Adam Brian Adam Scottish National Party 4:43, 17 March 2004

I echo the remarks that others have made about the contribution that the clerks made to the report's production. I also echo the remarks that my colleagues on the Enterprise and Culture Committee made about the nature of the report. I fully endorse the report, both as an individual member and on behalf of my party.

A range of comments has been made on matters across the breadth of the report. I will concentrate my remarks on the key recommendations in paragraphs 15, 16 and 17, to some of which other members have referred.

Paragraph 15 says:

"The Committee recommends that, if the aspiration is to grow the Scottish economy, the Executive should significantly increase its investment in higher education in real terms."

I believe that the sentiments that Susan Deacon and Christine May expressed are very much in line with that recommendation. Although those members did not say as much, there is disappointment that the Executive has not yet even endorsed that recommendation, and has not given the exact figures—or details of how it might arrive at them—in relation to what might be a significant increase.

Paragraph 16 suggests that, although increases in funding

"can in part be achieved by various measures", the Executive will have to meet the bulk of those increases. The point in recommendation 17, on the research sector, has been well made by others.

I would like to go back to discuss how we might measure the success or otherwise of the Executive's contribution. John Swinney asked the key question: how are we going to do that? Others such as Alex Neil have made similar points.

Figures are chiels that winna ding, as another member pointed out. That was in relation to a rather narrow area of research funding, without considering the totality. The figures that we have, as Fiona Hyslop rightly pointed out, show that the share of Scottish Executive funding that this sector will get over the next three years will increase by 14.8 per cent. That has to be set against the overall Scottish Executive budget increase of 23.6 per cent. Those figures are very much paralleled in reverse by what is going to happen south of the border. I know that we should not simply concentrate on what might or might not happen south of the border but, nevertheless, those are the figures. Our relative share is decreasing while south of the border the share is increasing. While we are a unitary state, there is undoubtedly the possibility of distortion of what is supposed to be a unitary internal market. That does not appear to have been specifically addressed by the Executive so far.

Photo of Murdo Fraser Murdo Fraser Conservative

Does Mr Adam agree that, even if we were not a unitary state, the problems would still be there? Because of our geography, we would still have cross-border flow between Scotland and England of academics and students. Brian Adam would like Scotland to be an independent country, but that would not solve the problems of Scottish higher education.

Photo of Brian Adam Brian Adam Scottish National Party

I agree that, if we were not a unitary state, the problems would still exist. However, the difference would be that we could address the problems directly without looking over our shoulder all the time to see whether we had approval from elsewhere for our course of action.

I was delighted to hear that the assertions made earlier by ministers—with regard to Scotland receiving 20 per cent higher funding per capita—have been dropped. I welcome that, although I note that none of the Labour members referred to it. However, we still have to have appropriate comparators and I hope that, at some point, we can agree what those comparators might be.

Photo of Lewis Macdonald Lewis Macdonald Labour

Does Mr Adam accept that page 3 of the higher education review has sought to establish an agreed baseline, and does he agree that it is welcome that all the stakeholders in the higher education sector have joined together to reach that established baseline?

Photo of Brian Adam Brian Adam Scottish National Party

There is still a lack of clarity. Most of the people who participated in the review have decided to take matters into their own hands by launching their own website. That shows that significant concerns remain.

I welcome today's commitment by the Liberal Democrats' higher education spokesperson that they will completely rule out any increase to the endowment. I look forward with interest to the response from the minister to hear whether that is Executive policy or just the policy of the Liberal Democrats.

It is true that we do not exist only as a collection of different countries in an island state, and it is true that we have to compete globally. It is a pity that we have not been able to focus our attention on making ourselves as globally competitive as we should be. However, when one partner in the existing United Kingdom is taking a course of action that does not take into consideration the effect of that action elsewhere, we have to address the situation. I wish that we could move the debate on to a more global sphere, as Alex Neil and others have said. I support the report that is before us today.

Photo of Murray Tosh Murray Tosh Conservative

For members' benefit, I should explain that the minister decided to use his allocation of time at the beginning of the debate. I therefore ask Mike Watson to respond to the debate on behalf of the committee.

Photo of Mike Watson Mike Watson Labour 4:49, 17 March 2004

I am sorry that, even as I rise to my feet, Murdo Fraser is disappointed. Perhaps there is nothing new there. I suppose that by this stage in his political life, he should have learned to come to terms with disappointment.

This has been a stimulating debate in many ways. I echo the comments that have been made by many of my colleagues about the support that we had in putting together the report, not just from all those who took the time to give evidence orally and by other means, but from our clerks and the Scottish Parliament information centre. Committee members, too, did quite a bit of work in ensuring that the report drew heavily on the comments that we heard in evidence.

We state in the report:

"The Committee supports the principle that higher education is fundamental to Scotland's economic development and success. Highly skilled and educated people, world-class pure and applied research, and the cultural, economic and social benefits of universities to individuals and their wider communities are and will continue to be key elements in Scotland's growth."

That may seem to be self-evident, but it is more important than ever that we state that and act in line with those beliefs.

I think that it was Richard Baker who described the introduction of university top-up fees south of the border as a challenge to which we in Scotland would need to rise. He also said that the evidence to the committee confirmed Scotland's advantages over England and Wales. We have had some exchanges about that across the chamber this afternoon. Although the figures may be the source of some dispute, the evidence that we received from Universities Scotland, individual universities and many other organisations cannot be gainsaid simply on the basis of political expediency. There is considerable substance to the figures, which is the basis on which we began our inquiry.

The committee rose to the challenge. The work of all colleagues on the committee reflects that.

To some extent, I share the disappointment that was outlined by Susan Deacon and Christine May about the Executive's response thus far. Although it is not for me to defend the Executive, it must be said that the report came out a month before the publication of the phase 3 report, which—notwithstanding Alex Neil's remarks—has added considerably to our knowledge of the Scottish higher education sector and how it relates directly to south of the border, which is the item of the moment, as far as top-up fees are concerned.

Our report was published a month before the phase 3 report, and six months before the spending review. On hearing the remarks of colleagues in the debate, I examined the figures and, by my calculations, of the 17 recommendations that we made, 10 were accepted. One of those recommendations was on cross-border flows, which we advocated had to be monitored immediately; coincidentally, the phase 3 report, too, advocated that. I was pleased that the minister said that that will be done, because that will be an important aspect in framing our response to the introduction of top-up fees in 2006.

Photo of Chris Ballance Chris Ballance Green

Having not been able to speak in my committee's debate, I am grateful to Mike Watson for allowing me to intervene. Will Mike Watson draw attention to recommendation 9, which urges the Executive to encourage research collaboration between the universities, and ask the Executive how it plans to respond to that recommendation?

Photo of Mike Watson Mike Watson Labour

I thank Chris Ballance for that. By my reading, the Executive has acknowledged recommendation 9 and will encourage collaboration largely through the task force that was set up by the Department for Education and Skills to bring universities and businesses closer together, rather than just to bring universities together. Both those links are important.

As I said, that was one of the 10 recommendations that were accepted. One recommendation was ignored, four were delayed pending the phase 3 report, and two were delayed pending the outcome of this year's spending review. Of course, the last two recommendations are the most important, because they ask the Executive to put in what we term significant funding for the sector, to respond to events south of the border. Those are the key issues, and if we do not have the basic funding for higher education, some of the less important issues will not matter, because we will be in considerable difficulty in the years to come.

I say to Murdo Fraser that it is unrealistic to expect an immediate response, which would be nothing more than a knee-jerk reaction. It is important that the issues are properly considered, and that we get a response of substance, rather than a response right away. We await what the Executive will say, and while the noises about the spending review have been positive, if we see no result from the spending review, those of us who have to an extent adopted a wait-and-see policy will say so firmly. I would not hesitate to do that.

The report contains a number of recommendations that respond to the considerable evidence that we received. Although the matter is not directly related to higher education, James Douglas-Hamilton mentioned relations with Whitehall departments and the fact that the report was critical of the way in which the white paper was put together. One organisation—I think that it might have been the National Union of Students Scotland—told the committee that there is not a single mention of Scotland in the white paper and I have not been able to disprove that remark. If the point is true, it is at best unfortunate and at worst downright shameful, because the relationships that the various Scottish Executive departments have with their counterparts south of the border are important to the way in which devolution develops. That situation should not have been allowed to happen. The matter has been drawn to the attention of ministers here and south of the border, so I hope that the situation will not be repeated.

Photo of Jim Wallace Jim Wallace Liberal Democrat

My experience since taking over the portfolio has been one of good co-operation. I have had meetings with Charles Clarke and telephone calls with Charles Clarke and Alan Johnson, as and when issues develop. The relationships among officials are certainly better than before. The committee was right to highlight the problem that clearly existed when the white paper was published, but while we do not necessarily agree with the policy of top-up fees, there have been good working relationships with Whitehall in working through some of the consequences of that policy in the past nine or 10 months.

Photo of Mike Watson Mike Watson Labour

I hear what the minister says. I emphasise that joined-up government is important not just within Scotland, but within the various parts of the United Kingdom.

Alasdair Morgan and Christine May talked of the need to give more emphasis to the pay of teaching and research staff, and our report stressed that point. I was pleased that the phase 3 report on the competitiveness of higher education, which was published recently, made the point that the issue is important and advocated pay modernisation. That report echoed the committee's belief that we need to reduce the number of contract staff, particularly in research, and thereby increase job security. To some extent, such a move might be a response to the attractions that could emerge south of the border if top-up fees are introduced there in their proposed form.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

The report was right to talk about pay modernisation, but today's announcement of an increase of 3.4 per cent for teaching staff does not augur well for modernisation in the coming year. What timescale would be appropriate for modernisation?

Photo of Mike Watson Mike Watson Labour

That is a matter for the staff, their unions and the employers to thrash out. Our report makes it clear that modernisation is important. The time to start preparing for the introduction of top-up fees, which is only two years away, is now. The sooner that that gets under way, the better.

I agree with those who talked about the need to take a strategic approach to the higher education sector by linking it with a policy of developing Scotland as a thriving economy. If we do not have a vibrant and highly competitive higher education sector, that will not happen. Research is a vital component of such a sector. In some senses, although not in others, I was slightly surprised to hear Alex Neil's comments about what he termed, with characteristic flourish, "fiddling". Of course, he picked an example—defence research—that suited his case. I have no way of knowing whether the figures that he quoted are accurate—they may be, but they may just as well not be. However, the point is that Scotland's universities punch above their weight in grant-funded research. We get 13.2 per cent of all grant-funded research in the UK, which is about 50 per cent more than our proportion of the population. Scottish universities should be proud of that. If we are not doing well in one sector, the clear implication is that we are doing even better than the figure that I quoted in other sectors. That must be borne in mind. We should all be proud of Scottish universities' success in attracting funding for research.

When reports of committees of the Parliament come before the Executive, they must be taken seriously and given rather more import than, in my experience, is often the case at Westminster. That is why I was pleased that the committee, for the first time, took the step of sending our report to all Scottish members of Parliament to allow them to see what we are doing and how the Executive responds in a way that gives a bit more importance to committees' work than is the case in Westminster.

I started with a quotation from the committee's report and I shall finish with another. The report states:

"The Committee is of the view that, whatever the detail of the final proposals, the introduction of top-up fees will result in an additional income stream to higher education in England."

That will affect the competitiveness of the sector in Scotland. On maintaining competitive advantage in Scotland, the report continues:

"While this can in part be achieved by various measures which can be taken by institutions themselves, we believe that significant Executive funding will also be necessary."

Ultimately, whatever we do, all the aspects of the report will contribute to the strengthening of higher education in Scotland. There will have to be additional funding—that point has been well made not only by the committee, but in the debate—and I hope that the Executive will bear that in mind as it deliberates on the phase 3 report and its spending review throughout the rest of the year.