Management of the system

5.38 Scottish higher education, either in higher education institutions or further education colleges, is not currently managed as a system. We are aware of the influence of The Scottish Office Education and Industry Department (SOEID) upon the further education sector and that, in practice, the Scottish Higher Education Funding Council (SHEFC) is involved in 'steering' its sector in certain directions through the mechanism of the funding formula and through incentive grants, often in response to Government guidance. We are also aware that SHEFC has attempted to steer institutions into thinking strategically about how to deal with existing and future funding circumstances, and we commend this work.

5.39 Whilst acknowledging that much can be achieved by this approach, we are doubtful that it can realise required changes as swiftly or as thoroughly as may be necessary in today's fast-changing world. We are conscious that the changes which we and the National Committee are recommending will have far-reaching implications for institutions. We are, however, opposed to the establishment of a central planning body, as this approach has been tried and failed in the past.

5.40 For purposes of funding, and providing strategic advice, we have agreed that there is great value to both institutions and the Government, particularly in a difficult financial climate, in the existence of a 'buffer' body, or bodies, between them. We do not see, however, that the functions of funding and of providing strategic advice need to be combined.

5.41 Our work has been concerned with higher education and we have considered this wherever it is delivered. In considering the oral and written evidence submitted to the Inquiry we have become convinced that the further and higher education sectors should be brought closer together for funding purposes.

5.42 Of the organisations representing institutions, the Committee of Scottish Higher Education Principals (COSHEP) does not directly address this issue, although it describes its position as 'fairly relaxed about the concept of tertiary education'.99 The Association of Scottish Colleges (ASC), in its submission, plans to examine the pros and cons of a funding council for further education but does not wish to express a view at this stage.100 More explicitly, the Scottish Higher Education Funding Council (SHEFC) has suggested that a Tertiary Education Funding Council for Scotland should be established covering both further and higher education and providing 'the strategic direction for the system as a whole'.101

5.43 We are attracted to the idea of combining the responsibility for further and higher education within the same organisation, agreeing with SHEFC that 'integration across the entire spectrum of non-advanced further education teaching, higher education teaching (wherever it is delivered) and research would develop existing patterns of participation in further education and higher education in Scotland'.102 Carefully constituted joint arrangements would promote continued diversity of mission and particularly protect the value of the further education work within the continuum. We share COSHEP's view, however, in being 'equally clear that tertiary education is not a synonym for higher education and must not be used as a fudge to obscure the obvious and important differences between the further and higher education sectors'.103 We are, therefore, suggesting that new and separate bodies should be established to oversee the two separate functions of strategy and funding of the provision of higher education. We consider these in more detail below.

Structural issues
Although we have sought not to become involved with individual cases and short-term specifics, two matters have emerged, the University of the Highlands and Islands Project and teacher education in Scotland, about which we have drawn some general conclusions which are relevant when considering the management and planning of the system as a whole.

University of the Highlands and Islands Project
The University of the Highlands and Islands (UHI Project), based on a number of further education colleges and research institutes, represents an exciting and challenging development in the Highlands and Islands of Scotland. In the course of the Inquiry, we have received copies of two submissions from the University of the Highlands and Islands Project (UHI Project) and we discussed this in detail at the oral evidence session with Highlands and Islands Enterprise. We have, however, also noted comments from other parts of further and higher education about the UHI Project. We share the concerns of these institutions that the provision offered must be coherent and complementary in terms of the rest of the sector, that it must not simply displace student numbers from existing institutions, that the quality of provision must be assured and that value for money must be achieved.

In the short to medium term we wish to make the following suggestions for handling the UHI Project, to ensure that maximum benefits accrue to students in the form of high quality higher education and that value for money is achieved.

5.47 The UHI Project is currently managed and funded in the further education sector, and as such is outwith the role and remit of the Scottish Higher Education Funding Council (SHEFC). It cannot, as now, be planned strategically as part of the other degree provision being offered in Scotland. We therefore suggest that when the UHI Project begins to offer degree-level provision, responsibility for this, although not for the further education colleges upon which it is based, should be transferred into the existing higher education sector. This must, however, be accompanied by a commensurate allocation of funding to that sector. Such degree-level provision as is finally offered by the UHI Project should be subject to the same quality assurance procedures and processes as other degree-level programmes in Scotland.

5.48 In the meantime, we believe that the degree-level provision being developed by the UHI Project should as far as possible draw on the expertise and experience of existing and established higher education providers in Scotland. This will both help to assure the quality and standards of the provision being developed and ensure that funding which is made available to the project is eventually of benefit to the Scottish higher education sector as a whole. We believe that our suggestions about the funding and strategic policy for the sector, outlined below, will assist with these tasks.

5.49 Finally, we wish to make a more general point. We are fully supportive of the need, for economic and equity reasons, to make higher education provision available to rural communities, from Wigtownshire to Cape Wrath to Kirkwall and beyond. Whilst we acknowledge the special circumstances in which the UHI Project has been established, we agree with the National Committee that intentions to establish further new universities should be considered against a set of agreed criteria and that greater clarity is needed about where ultimate responsibility lies for decisions about the establishment of additional universities.

Teacher education
The National Committee commissioned a review of teacher education and training in the UK from Sir Stewart Sutherland, Principal of the University of Edinburgh, and, in recognition of the different arrangements which pertain in Scotland, we sought a separate Scottish report within that review. We have considered the Scottish report and are pleased to note its conclusion that: 'the structural arrangements for the funding and organising of teacher education and training have served Scotland well and, indeed, in many respects they provide a model for other parts of the UK'.104

5.51 The Sutherland Report does, however, suggest that there is scope for examining the nature and exact division of the responsibilities of the various agencies involved in the education and training of teachers in Scotland. It also considers that the processes involved in funding, managing and undertaking teacher education and training should be examined with a view to strengthening the contribution of the higher education sector in a number of areas.

5.52 We accept that teacher education and training requires more strategic direction and we recommend that the arrangements for oversight of higher education provision in Scotland, which we propose below, should take account of this specific requirement in early course.

The Scottish Further and Higher Education Funding Councils
We have agreed that there is a need for a more focused approach to securing efficiency, effectiveness and value for money in the higher education sector, wherever higher education is delivered. We acknowledge the work which the Scottish Higher Education Funding Council (SHEFC) has done in this area and we believe that institutions would benefit from further support, information and guidance which a reconstituted funding body could provide.

5.54 We can see merit in a single body which would have the widest, fullest picture of further and higher education funding across the two sectors and which would allow for a more holistic consideration of higher education provision. We are well aware, however, that the two sectors are very different. The further education sector has a local focus and requires to be able to meet the needs of local employers and communities, whilst also responding to national government initiatives and policy. Higher education institutions have more of a national and international focus. The composition of the student body in the further education sector is also very different from that in the higher education sector and arrangements for quality assurance in the two sectors are different.

5.55 We therefore believe that one single funding council should not assume responsibility for the full range of educational provision from basic adult education through to research degrees. The non-advanced further education curriculum, which includes provision for students with learning difficulties and education and training at craft and technician level, requires a dedicated funding council that has the background and expertise necessary to respect and preserve this essential aspect of the education continuum.

Recommendation 23
We recommend to the Government that the appropriate legislation should be enacted or invoked to establish two separate funding councils - one for further education and one for higher education - each with a separate chairman but under a single organisation with a single chief executive.

5.56 We propose that no fewer than four but no more than half the membership of each council should be common to promote co-operation at a strategic level. These councils would each have a separate chairman but would be supported by one chief executive and administrative infrastructure - similar to the arrangements which currently exist in Wales. We believe this to be the most cost-effective approach in terms of the economies of scale it will achieve. It will also result in a common approach from the two councils to many of their core functions, including, for example, the development of a common basis for data collection. We believe that this approach will, in turn, foster collaboration and synergy between the further and higher education institutions themselves. Merging the two councils would remain an option for future consideration.

5.57 Mindful of our terms of reference, most of this section is concerned with the role and remit of the proposed 'Higher Education Funding Council' (HEFC), except where these need to be defined against the 'Further Education Funding Council' (FEFC).

5.58 We have considered carefully the remit of the two councils. One option would be to transfer to the HEFC all higher education provision, wherever it is delivered and including, therefore, HNC/D programmes. Although this would provide the HEFC with a very good overview of higher education provision in Scotland, it would be incompatible with the integrity of the mission of further education institutions and with the value of HNC/D qualifications within the further education-higher education continuum. We believe the success of the HNC/D qualifications in Scotland is, in part, related to the current, separate, funding arrangements.

There is no completely neat solution to this problem and we believe, on balance, that, properly constituted, the two funding councils should be able to accommodate this natural division in higher education provision.

Recommendation 24
We recommend to the Government that the proposed funding council for further education should have responsibility for funding all provision leading to qualifications offered by the Scottish Qualifications Authority.

Recommendation 25
We recommend to the Government that the proposed funding council for higher education should have responsibility for all provision offered by higher education institutions and degree provision wherever it is offered, including degree provision in the further education colleges and, when it comes on stream, the University of the Highlands and Islands Project.

5.60 We have noted the somewhat anomalous position of the Scottish Agricultural College which, despite its status as an institution of higher education, is funded, not by the Scottish Higher Education Funding Council (SHEFC), but directly by The Scottish Office. We invite the Secretary of State for Scotland to consider whether the Scottish Agricultural College might be more appropriately brought into the sector which will be funded by the proposed Higher Education Funding Council.

5.61 We envisage that the councils will have a role in securing the assessment of quality of provision they fund. We believe that the assurance of quality of provision should be organised along similar lines, with the new Quality Assurance Agency being responsible for all programmes within the sphere of funding of the Higher Education Funding Council, and therefore also for degree-level provision wherever it is delivered, including franchised provision and the University of the Highlands and Islands Project (UHI Project). Arrangements for sub-degree provision in the further education sector would continue to be determined within that sector through the Scottish Qualifications Authority (SQA). We believe this approach will both minimise the administrative burden upon institutions and act as a disincentive to mission drift.

Recommendation 26
We recommend to the new Quality Assurance Agency that it should be responsible for assuring the quality of all programmes offered within higher education institutions and all degree-level provision wherever it is delivered.

5.62 The Scottish further and higher education funding councils would be responsible for the range of tasks associated with the allocation of funding, accountability for resources and securing cost-effectiveness in the sector. We envisage an enhanced role for the new Higher Education Funding Council (HEFC) in the more rigorous collection and analysis of management statistics. These data should include both financial and non-financial parameters for institutions to enable governing bodies to make informed decisions. The proposed Further and Higher Education Funding Councils should, therefore, establish a benchmarking team within their new shared executive organisation.

5.63 The new HEFC will also require and review institutional strategic plans, possibly making an annual visit to each institution to discuss its plan. It will be required to interface with some of the new agencies which are being established in higher education or which are proposed by the Inquiry. It will also have a role in encouraging the enhancement of teaching and learning through discussing with, and contracting special initiatives from, the proposed Institute for Learning and Teaching in Higher Education. Finally, the new HEFC would liaise with the proposed Scottish Forum for Higher Education (see below) over the provision of information and statistics and the receipt of advice from the Forum.

5.64 We hesitate to suggest a role and remit for the proposed Further Education Funding Council (FEFC) as, to a large extent, this is outwith our terms of reference. However, as we are proposing that the funding of a significant proportion of higher education provision, that of HNCs and HNDs, should be carried out by the FEFC, we should like to suggest that the functions of that body might most usefully be developed along similar lines to those we have outlined for the HEFC, above.

Scottish Forum for Higher Education
The last review of higher education in the UK was carried out over 30 years ago. Even in Scotland it is over a decade since the Scottish Tertiary Education Advisory Council, now disbanded, reported. Throughout our work, we have identified a need for a more regular ongoing review of the higher education sector and a need for a more strategic vision to be provided for the higher education sector. We have considered this issue in some depth and have concluded that a purely advisory 'Dearing'-style body should meet intermittently, at the request of the Secretary of State, to advise Ministers on the way ahead for Scottish higher education and to interface with other parts of the education system.

Recommendation 27
We recommend to the Secretary of State for Scotland that a new body - the Scottish Forum for Higher Education - should be established to advise the Secretary of State on the strategic direction of higher education in Scotland.

5.66 The Forum should have responsibility for maintaining an overview of higher education and should advise the Secretary of State about the key strategic issues arising for higher education in Scotland and the needs of the Scottish economy. It should also monitor the implementation of government reforms in the light of the Inquiry's recommendations.

5.67 The Forum might also have a role in advising about the need for restructuring of provision, for example at discipline level. In view of the importance and sensitivity of its work, the Forum should comprise a majority of members who are involved in, or knowledgeable about, education from schools to further and higher education institutions, although these would not be representatives of any institution or body. Other places would be filled by lay members who would bring a wider view of the needs of employers and the Scottish economy. The Forum would therefore be well-placed to cover all issues upon which higher education is likely to impact in Scotland.

5.68 In order to carry out its role in overseeing the implementation of government policies arising from the Inquiry's recommendations, the Forum would require a small budget to commission research and studies to inform its work. However, we do not envisage that it would make direct demands on individual institutions for information. The new Further and Higher Education Funding Councils, the Higher Education Statistics Agency, the new Quality Assurance Agency and other agencies with a role to collect and make use of sector data would be expected to provide it with access to their databanks. Secretariat services could be provided through an existing body.

5.69 In this context, we note that the National Committee is recommending an independent advisory committee to be convened every four to five years to assess the state of higher education and advise the Government of the day on financing, on participation and in particular, on any changes required in the level of student support and contributions from graduates in employment. It will be a matter for the Scottish Secretary of State to decide whether or not it is desirable for Scotland to be part of these arrangements. We believe that in Scotland, in the immediate post-Inquiry period, as a result of the extensive changes being proposed for the higher education system, the Forum might meet twice a year to inform the Secretary of State on progress and issues arising out of implementation. Thereafter, the Secretary of State would be responsible for inviting the Forum to meet in order to provide strategic advice on the sector as a whole.

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