Scottish Higher education and the Scottish economy4.117 We consider Scottish higher education providers to have a significant and valuable role in the Scottish economy, as creators of revenue, as generators of external income from services, as economic regenerators, as producers of skilled recruits for employers and as centres of leading-edge research. We have sought to assess how that role is fulfilled at present. The importance of research to the development of the Scottish economy has been considered earlier. 4.118 We believe that Scottish higher education should build on this role. In particular, we believe that there is a need to build on the current partnerships between the higher education sector in Scotland and Scottish employers, which is to their mutual benefit. We have examined a number of ways in which these partnerships may be enhanced. The creation of revenue
4.120 The economic contribution of further education colleges in Scotland, beyond the provision of quality personnel for employers, should not be overlooked. Another McNicoll report, 'The Impact of Scotland's Colleges on the Economy of Scotland', found that, in 1993/94, Scottish colleges injected £602.9 million into the Scottish economy and sustained over 19,100 full-time equivalent jobs, over 40 per cent of which were outside the further education sector.71 The study also shows that, aside from their economic contribution, Scottish further education colleges have a social and cultural role in the communities they serve, as providers of expertise and advice and providers of facilities.72 4.121 This analysis shows that Scottish higher education is a major player in the Scottish economy and has a major impact on Scottish economic activity. Generating external UK and
overseas income from services 4.123 Higher education is acknowledged to be one of Scotland's major service sector exporters. The 1997 Scottish Council Development and Industry Service Sector Export survey showed higher education's international activity to be responsible for eight per cent of all Scotland's service sector exports. The survey noted that, 'tourism aside, higher education remains Scotland's leading exporter, by value, recording an increase of 7.8 per cent to £151.8 million [in 1995].'75 There is other evidence from ongoing Scottish Office Education and Industry Department (SOEID) work on 'Trade in Skills', under the Scottish Input Output Project, that suggests that Scotland's strongest comparative export advantage is in its provision of higher education both to the rest of the UK and abroad.76 4.124 We have noted that institutions across the Scottish higher education sector have links to countries in every part of the globe. Several institutions have highly successful distance learning operations in addition to attracting large numbers of overseas students. The considerable strength of Scottish universities in exporting higher education services is reflected in the fact that Scottish universities have won three Queen's Awards for Export in the past five years.77
4.126 We are interested to note that there are also projects which seek to make specific links between overseas students and Scottish business in order for potential business export contacts to be made.78 4.127 We would encourage the Scottish higher education sector to continue to develop its international activity both individually and collectively and in collaboration with public agencies and business. We note that such activity brings benefits to Scotland beyond those accruing to the institutions and see it as particularly important, both for the institutions and for the economy more generally, that more partnerships are developed with business in order that full advantage can be taken of Scottish higher education's expertise. 4.128 We see an important opportunity for Scottish higher education to develop its role as an exporter of teaching expertise to other sectors, both in Scotland and the UK and further afield. We have seen that efforts are being made to exploit this opportunity through the establishment of a new distance learning company, Scottish Knowledge, designed to make Scottish higher education available throughout the world via the Internet, CD-ROM and satellite. We note the support voiced for the project by many Scottish higher education institutions. It is our view that there may be scope for effective partnership between industry and higher education through projects of this kind, provided that the necessary initial investment can be raised. We are encouraged to record that Scottish Knowledge is making good progress towards raising its required investment capital. The regenerative impact 4.130 However, we believe that higher education can also have a powerful long term regenerative impact. This is one of the arguments that has been put forward in favour of the University of the Highlands and Islands (UHI) Project, although we cannot, of course, make any predictions about the success of the Project at this stage. We consider that in such cases regeneration can best and most sensibly be achieved through partnerships between the institution and local and regional interests. We have, therefore, noted the contribution which the region and local industry is making to the UHI Project, over and above the funds which are being made available by the Government. Similarly, higher education can have a positive influence in attracting overseas industry to Scotland: 'the decision of where to locate can be influenced, for example, by the number, nature and quality of student output and academic research expertise'.79 Meeting the recruitment
needs of employers 4.132 Evidence suggests that the great majority of Scottish graduates find work in Scotland.81 In 1996, 75.5 per cent of Scottish domiciled graduates from Scottish universities went on to employment or further study in Scotland, while 23.9 per cent of other UK-domiciled graduates remained in Scotland. This suggests that the Scottish economy and Scottish employers are successful in meeting the employment needs and wishes of both Scottish and other UK-domiciled graduates. It also suggests that there is a rich supply of graduates for Scottish employers. We believe that this must continue to be the case and that efforts should be made to ensure that Scotland continues to be an attractive destination for its own graduates and those from elsewhere in the UK. 4.133 It is a view shared by many, not least in Scotland, that one of the key purposes of higher education is to prepare students for employment: 'the first objective of higher education should be to impart the skills and attributes which will allow for active participation in employment'.82 We have already noted that we endorse the conclusions of the National Committee that four skills (communication skills; numeracy; the use of information technology; and learning how to learn) are essential to graduates' future success in any field of life. We believe that employers value analytical and specialist skills but need also core skills and breadth. A similar view was expressed at a seminar of Scottish small and medium-sized employers (SMEs) which took place in December 1996 and which was attended by members of the Scottish Committee. We would add, however, that those entering employment from higher education need the skills to apply the knowledge which they have acquired during study.83 There is a strong case for saying that 'while many employers have development programmes once within employment ... these skills should be embedded in the higher education system.'84
4.135 The role of sub-degree qualifications in meeting the needs of employers and of the Scottish economy must not be forgotten. This is shown by the outcome of a consultation exercise on Higher National awards by the then Scottish Vocational Education Council (SCOTVEC), completed in 1996, which involved a range of employers and professional bodies. The exercise found that 'Higher National awards are highly valued and...the system is working well; there is no demand for radical change'.85 4.136 Significant collaborative activity between the Scottish higher education sector and employers, aimed at better meeting the needs of Scottish employers, is already under way. We have read of examples of degree programmes being developed to meet specific skills needs in, for example, the plastics and electronics industries. 4.137 Similarly, we note the success of existing 'people transfer' schemes in Scotland, including:
4.138 Evaluation of such schemes suggests that they have been successful. We note that both employers and academic staff involved in such projects considered that such links should be strengthened and improved. 4.139 We have thought carefully about how graduates and employers can better meet one another's needs, in order both to give strength to the Scottish economy and to maintain a healthy demand for, and flow of, quality graduates to and from the rest of the UK. In an earlier section of the report we considered how employers might become more involved in the design and development of courses and curricula, not least those leading to the new-style Bachelors qualifications. We believe that there are additional ways in which employers can and should take greater responsibility for ensuring the development and output of graduates that meet their demands. These include providing opportunities for:
4.140 In our discussions with employers, there was general support for the value of vocational work experience for full-time undergraduates. Sponsorship and vocational work experience were fairly common in the 1960s and 1970s but the more competitive pressures of recent times have caused a number of those schemes to be abandoned. The concept of sponsorship whereby a school leaver spends a year in employment prior to taking up a place at a university or college and then spending summer vacations at the sponsor's work place is generally agreed to be a model that produces more rounded and able graduates. In a learning society it is time for employers to consider the re-introduction of such schemes. It is a model which lends itself to all employers not just those involved in industry. 4.141 Sponsorships can and should:
4.142 As well as sponsorships of this kind, we see value in the provision of quality work placements and 'people transfer' schemes, particularly in the development of graduate employees for the small and medium-sized enterprise (SME) sector. The Scottish economy has a great dependence on the creation and success of SMEs. It is, therefore, important that graduate involvement in such companies becomes the norm. We believe the Shell Technology Enterprise Programme (STEP) award scheme conceived by Shell UK Ltd could, if extended, go a long way towards achieving greater involvement of graduates in SMEs. The STEP award is given to undergraduates who undertake a specific project in an SME during the summer vacation. 4.143 It is clear that there are many Government initiatives in place to assist SME development. We believe that the Scottish Office Education and Industry Department (SOEID) should consider using some of the existing funds allocated for SME support to develop an extended STEP scheme. We estimate that for every £1 million of annual spend matched by similar funds from SMEs it would be possible to provide approximately 1000 undergraduates with 12-week summer vacation work placements. 4.144 Such work experience opportunities would demonstrate to the SME the value of employing graduates on a full-time basis. Work experience and sponsorships give employers the opportunity to see students at work, first-hand. Through testing and developing skills for employment, and providing experience of workplace procedures and equipment, employers can help secure for themselves a better skilled graduate workforce. 4.145 We firmly believe that employers who employ graduates, or who will begin to employ graduates in the future, should be committed to, and make a contribution towards, the effective recruitment and development of those graduates. We consider that the Investors in People (IIP) standard offers a good indicator of this commitment where, as will be the case for organisations which need and use graduate skills in the workforce, procedures to recruit and develop graduate employees are examined as part of the overall IIP assessment exercise. Recommendation 16 Recommendation 17 Recommendation 18
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