Introduction

1. This summary of our main report includes some of our key recommendations. You are strongly recommended to read as well the full list of our recommendations at the back of the summary.

A vision for 20 years: the learning society

2. Our title, ‘Higher Education in the learning society’, reflects the vision that informs this report. Over the next 20 years, the United Kingdom must create a society committed to learning throughout life. That commitment will be required from individuals, the state, employers and providers of education and training. Education is life enriching and desirable in its own right. It is fundamental to the achievement of an improved quality of life in the UK.

3. It should, therefore, be a national policy objective to be world class both in learning at all levels and in a range of research of different kinds. In higher education, this aspiration should be realised through a new compact involving institutions and their staff, students, government, employers and society in general. We see the historic boundaries between vocational and academic education breaking down, with increasingly active partnerships between higher education institutions and the worlds of industry, commerce and public service. In such a compact, each party should recognise its obligation to the others.

4. Over the next 20 years, we see higher education gaining in strength through the pursuit of quality and a commitment to high standards. Higher education will make a distinctive contribution to the development of a learning society through teaching, scholarship and research. National need and demand for higher education will drive a resumed expansion of student numbers – young and mature, full-time and part-time. But over the next two decades, higher education will face challenges as well as opportunities. The effectiveness of its response will determine its future.

5. That future will require higher education in the UK to:

• encourage and enable all students – whether they demonstrate the highest intellectual potential or whether they have struggled to reach the threshold of higher education – to achieve beyond their expectations;
• safeguard the rigour of its awards, ensuring that UK qualifications meet the needs of UK students and have standing throughout the world;
• be at the leading edge of world practice in effective learning and teaching;
• undertake research that matches the best in the world, and make its benefits available to the nation;
• ensure that its support for regional and local communities is at least comparable to that provided by higher education in competitor nations;
• sustain a culture which demands disciplined thinking, encourages curiosity, challenges existing ideas and generates new ones;
• be part of the conscience of a democratic society, founded on respect for the rights of the individual and the responsibilities of the individual to society as a whole;
• be explicit and clear in how it goes about its business, be accountable to students and to society, and seek continuously to improve its own performance.

• professional, committed members of staff who are appropriately trained, respected and rewarded;
• a diverse range of autonomous, well-managed institutions with a commitment to excellence in the achievement of their distinctive missions.

7. The higher education sector will comprise a community of free-standing institutions dedicated to the creation of a learning society and the pursuit of excellence in their diverse missions. It will include institutions of world renown and it must be a conscious objective of national policy that the UK should continue to have such institutions. Other institutions will see their role as supporting regional or local needs. Some will see themselves as essentially research oriented; others will be predominantly engaged in teaching. But all will be committed to scholarship and to excellence in the management of learning and teaching.

8. Higher education is fundamental to the social, economic and cultural health of the nation. It will contribute not only through the intellectual development of students and by equipping them for work, but also by adding to the world’s store of knowledge and understanding, fostering culture for its own sake, and promoting the values that characterise higher education: respect for evidence; respect for individuals and their views; and the search for truth. Equally, part of its task will be to accept a duty of care for the wellbeing of our democratic civilisation, based on respect for the individual and respect by the individual for the conventions and laws which provide the basis of a civilised society.

9. There is growing interdependence between students, institutions, the economy, employers and the state. We believe that this bond needs to be more clearly recognised by each party, as a compact which makes clear what each contributes and what each gains. Our view of the compact is summarised in Table 1.

The Committee’s approach to its work

10. From our first meeting we recognised the scale of the task facing us. We persuaded a number of external members to join working groups to broaden the range of expertise available to us and to help us to advance our work quickly. We gathered as much evidence as possible and heard a wide range of views on the future of higher education. The reports published with our main report describe the outcomes of that work.

11. Throughout our work we received tremendous support and commitment to our task from those within and outside higher education. We cannot name all those who helped us, but we are greatly indebted to every one of them.

Higher education today

12. Higher education in the UK can take justifiable pride in what it has achieved over the last 30 years. It has expanded opportunities: 1.6 million people are students in higher education. Almost a third of young people now go into higher education from school and college, and there are even more mature students than younger ones. Higher education has adapted as the needs of students and other clients have changed. It has maintained its international standing in research, introduced new approaches to learning and teaching and to quality assurance, and has greatly improved its cost-effectiveness. It continues to produce first degree graduates quickly and with low drop-out rates compared to other countries. All this has been achieved through the commitment of those who work in higher education.

13. After a very rapid rise in the number of students between 1988 and 1993, the Government placed a cap on any further growth in publicly-funded full-time undergraduate student numbers, and subsequently withdrew almost all public funding for capital expenditure. Its funding plans for the next three years require further reductions in unit costs. These reductions take place against a background of a unit cost reduction of more than 40 per cent over the last 20 years. This has been achieved, in part, by under-investment in infrastructure. Substantial redundancies are now in prospect and many staff feel that their contribution to the achievements of higher education over the last decade is under-valued. The concern now is that short term pressures to reduce costs, in conditions of no growth, may damage the intrinsic quality of the learning experience which underpins the standing of UK awards.

• the number of students has much more than doubled;
• public funding for higher education has increased in real terms by 45 per cent;
• the unit of funding per student has fallen by 40 per cent;
• public spending on higher education, as a percentage of gross domestic product, has stayed the same.

15. Although there is widespread support for the expansion of higher education which has taken place, there are some concerns that current arrangements for quality assurance are not sufficient to ensure comparability of standards in an enlarged sector. Alternative progression routes and qualification aims for a more diverse range of students are not yet fully established. There is also concern that competition between institutions may have hindered beneficial collaboration, and that funding arrangements which reward high quality research have diverted attention from the delivery of high quality teaching.

The wider context

16. External factors have affected the development of higher education since the Robbins report on higher education in the early 1960s. We judge that external changes will be even more influential over the next 20 years.

17. Powerful forces – technological and political – are driving the economies of the world towards greater integration. Competition is increasing from developing economies that have a strong commitment to education and training. The new economic order will place an increasing premium on knowledge which, in turn, makes national economies more dependent on higher education’s development of people with high level skills, knowledge and understanding, and on its contribution to research. The UK will need to invest more in education and training to meet the international challenge.

18. However, no public service can automatically expect increasing public expenditure to support it. Higher education needs to demonstrate that it represents a good investment for individuals and society.

19. The world of work is in continual change: individuals will increasingly need to develop new capabilities and to manage their own development and learning throughout life.

21. As the world becomes ever more complex and fast-changing, the role of higher education as a guardian or transmitter of culture and citizenship needs to be protected. Higher education needs to help individuals and society to understand and adapt to the implications of change, while maintaining the values which make for a civilised society.

22. Other countries have reached similar conclusions, and other higher education systems are responding. The UK cannot afford to be left behind.

Aims and purposes

23. In the light of these national needs, we believe that the aim of higher education should be to sustain a learning society. The four main purposes which make up this aim are:

• to inspire and enable individuals to develop their capabilities to the highest potential levels throughout life, so that they grow intellectually, are well equipped for work, can contribute effectively to society and achieve personal fulfilment;
• to increase knowledge and understanding for their own sake and to foster their application to the benefit of the economy and society;
• to serve the needs of an adaptable, sustainable, knowledge-based economy at local, regional and national levels;
• to play a major role in shaping a democratic, civilised, inclusive society.

Future demand for higher education

24. With increasing competition from developed and developing nations, and given the possibility of locating business operations anywhere in the world as a result of the development of communications and information technology, nations will need, through investment in people, to equip themselves to compete at the leading edge of economic activity. In the future, competitive advantage for advanced economies will lie in the quality, effectiveness and relevance of their provision for education and training, and the extent of their shared commitment to learning for life.

26. While the growing demand for higher education is evident, meeting that demand involves high costs. The national need to expand the present provision must be critically examined. The UK is one of the leaders in the European Union in terms of the proportion of its people graduating. The target set by the last Government for a third of young people to participate in full-time higher education by the year 2000 has already been largely met.

27. As the supply of graduates has expanded rapidly in recent years, the directly measurable national economic return from investment in higher education is expected to fall. Even so, it will still meet the Treasury’s required rate of return of six per cent in real terms. We note that participation in higher education by young people in the USA and Japan is much higher than here, although a significant proportion is below first degree level. Some of the nations of the Far East have ambitious plans for expansion. Our visits to France, Germany, the Netherlands, Australia and New Zealand showed a general, long term expectation of expansion. The UK must plan to match the participation rates of other advanced nations: not to do so would weaken the basis of national competitiveness. Our first conclusion is, therefore, that higher education should resume its growth.

28. We do not see value in any particular target figure for 20 years time. Informed student and employer demand should be the main determinant of the level of participation in the future. But bearing in mind that full-time participation by young people in Scotland and Northern Ireland has risen to around 45 per cent, a rise must be envisaged from the present 32 per cent to a national average of 45 per cent, or more. Within such a total, we believe that much of the expansion should be at sub-degree level, such as study for the Higher National Certificate (HNC) and the Higher National Diploma (HND). At the postgraduate level, especially in the context of lifelong learning, we see a need for continuing expansion in provision for taught higher degrees, at least in line with, and possibly above, the growth in first degree level qualifications.

Recommendation 1
We recommend to the Government that it should have a long term strategic aim of responding to increased demand for higher education, much of which we expect to be at sub-degree level; and that to this end, the cap on full-time undergraduate places should be lifted over the next two to three years and the cap on full-time sub-degree places should be lifted immediately.

Widening participation in higher education

29. Despite the welcome increase in overall participation, there remain groups in the population who are under-represented in higher education, notably those from socio-economic groups III to V, people with disabilities and specific ethnic minority groups. Many of the causes lie outside higher education itself, although we recognise that higher education can contribute to improving the situation. We believe that the best progress will be made if the funding of expansion is targeted on institutions which can demonstrate a commitment to widening participation in the recent past, and have a robust strategy for doing so in the future.

Recommendation 2
We recommend to the Government and the Funding Bodies that, when allocating funds for the expansion of higher education, they give priority to those institutions which can demonstrate a commitment to widening participation, and have in place a participation strategy, a mechanism for monitoring progress, and provision for review by the governing body of achievement.

30. We also make a number of recommendations designed to allocate funds to institutions and individuals to encourage wider participation.

Students and learning

31. If the future of the UK depends on the quality, effectiveness and relevance of its provision for education and training, it should be a national objective for its teaching and management of learning to be world class. Achievement of this objective does not require large additional expenditure, and we see no reason why it should not be realised.

32. But its realisation does depend on a change in the values of higher education, where research is currently the main basis for professional reward and advancement. A survey of academic staff showed that only three per cent of them believed that the payment system rewards teaching, but 63 per cent felt that it should.

33. There must, therefore, be a radical change in attitudes to teaching.

Recommendation 14
We recommend that the representative bodies, in consultation with the Funding Bodies, should immediately establish a professional Institute for Learning and Teaching in Higher Education.

35. Our vision puts students at the centre of the process of learning and teaching. They must have appropriate support and guidance in their academic work, on careers and in other areas if they are to make the most effective use of their investment in higher education. We make a number of detailed recommendations to enhance and support learning.

The nature of programmes

36. Education after the age of 16 in England, Wales and Northern Ireland is characterised by its close focus on a narrow range of subjects, particularly in the years immediately before entry to higher education. Over the last 30 years, this has been the subject of continuing debate, with proposals to widen the basis of study being frequently advocated. The most recent proposal, in a report by Sir Ron Dearing in 1996, was to offer pupils the option of an Advanced Diploma which combines studies in depth with complementary breadth. We commend this as a way forward.

37. But our concern in this report is with higher education. The evidence we have had from employers shows that, while the intellectual development that comes from the single honours degree is valued, they see advantage in graduates being able to study their specialism within a broad context. We favour students being able to choose between different types of higher education programme, including more offering a broader knowledge of a range of subjects.

38. There is much evidence of support for the further development of a range of skills during higher education, including what we term the key skills of communication, both oral and written, numeracy, the use of communications and information technology and learning how to learn. We see these as necessary outcomes of all higher education programmes.

39. The strongest single message which we received from employers was the value of work experience. This is particularly emphasised by small and medium sized enterprises who need new employees to be able to operate effectively in the workplace from their first day. Further development of work experience opportunities requires action by both employers and institutions.

41. We have emphasised the need for students and employers to be well-informed about what higher education offers. They need clear statements about the intended outcomes of higher education programmes and the levels at which it is possible to leave with a recognised award.

Recommendation 21
We recommend that institutions of higher education begin immediately to develop, for each programme they offer, a ‘programme specification’ which identifies potential stopping-off points and gives the intended outcomes of the programme in terms of:

• the knowledge and understanding that a student will be expected to have upon completion;
• key skills: communication, numeracy, the use of information technology and learning how to learn;
• cognitive skills, such as an understanding of methodologies or ability in critical analysis;
• subject specific skills, such as laboratory skills.

Qualifications and standards

42. Throughout the UK we see the need for a consistent range of awards that recognise achievement. We propose a framework of qualifications which provides for progression, is broad enough to cover the whole range of achievement, is consistent in its terminology, will be well understood within higher education and outside it, and incorporates provision for credit accumulation and, increasingly, scope for the transfer of credits earned in one institution to another.

43. It is fundamental to our approach that awards should be based on achievement, with less emphasis on the length of study required. The framework will cater for a range of aspirations and achievement and enable students to progress through higher levels as well as to move between programmes. It encompasses vocational and academic qualifications. The framework must have recognised standards at each level, and achieve standing here and abroad. We envisage individuals building up a portfolio of achievements at a range of levels over a working lifetime. The framework of qualifications we propose is set out in Chart 1, with some examples of people moving through the framework in Chart 2.

45. There is a need to clarify the current confusion over the designation of Masters degrees. We believe that the award of a Masters degree should be reserved for postgraduate research and for taught programmes whose requirements are appropriately more demanding than for a first degree in the subject. We propose the name ‘Higher Honours’ for advanced undergraduate programmes (such as the present MEng and MPharm).

46. We are particularly concerned to ensure that, when a programme is franchised by one institution to another, the standard required, and the quality of provision offered to the student, is no lower than in the parent institution. As the practice of franchising has expanded rapidly, we are concerned that some further education institutions may have extended themselves too broadly and entered into too many relationships. There have also been a very small number of cases where control by UK higher education institutions of programmes franchised overseas has been inadequate. In the interests of extending opportunity and encouraging lifelong learning, franchising should continue, but only where quality assurance and the maintenance of standards are not prejudiced.

Recommendation 23
We recommend that:

• the Quality Assurance Agency should specify criteria for franchising arrangements;
• these criteria should rule out serial franchising, and include a normal presumption that the franchisee should have only one higher education partner;
• franchising partners should jointly review and, if necessary, amend existing arrangements to ensure that they meet the criteria, and should both certify to the Agency that arrangements conform with the criteria;
• there should be periodic checks by the Agency on the operation of franchise arrangements to verify compliance;
• after 2001, no franchising should take place either in the UK or abroad except where compliance with the criteria has been certified by the Quality Assurance Agency.

48. We welcome the establishment of the Quality Assurance Agency to oversee quality and standards in higher education, but believe that it should have a somewhat different agenda from that currently proposed.

Recommendation 24
We recommend that the representative bodies and Funding Bodies amend the remit of the Quality Assurance Agency to include:

• quality assurance and public information;
• standards verification;
• the maintenance of the qualifications framework;
• a requirement that the arrangements for these are encompassed in a code of practice which every institution should be required formally to adopt, by 2001/02, as a condition of public funding.

49. The external examiner system, through which institutions seek to ensure common standards for their awards, worked well in a small community of institutions. It is inadequate to meet the needs of the much expanded and more diverse system of higher education that we now have. We need to build from established practice to create a more effective mechanism through which, while awards remain the responsibility of the individual institution, there is acceptance that the general standard of awards is a shared responsibility of the whole academic community.

Recommendation 25
We recommend to the Quality Assurance Agency that its early work should include:

• to work with institutions to establish small, expert teams to provide benchmark information on standards, in particular threshold standards, operating within the framework of qualifications, and completing the task by 2000;
• to work with universities and other degree-awarding institutions to create, within three years, a UK-wide pool of academic staff recognised by the Quality Assurance Agency from which institutions must select external examiners;
• to develop a fair and robust system for complaints relating to educational provision;
• to review the arrangements in place for granting degree-awarding powers.

51. We welcome participation by professional bodies in establishing the standards appropriate to their discipline. We particularly urge them to be actively engaged in accrediting programmes and in working with the academic community to specify required outcomes. We share the concerns of some professions about the required entry standards for programmes. However assessments at the end of the first or second year should form the basis on which decisions on progress to a degree should be based. We refer in our main report to particular concerns about entry standards for degree programmes in engineering.

Supporting scholarship and research

52. We have identified four distinct purposes for research in higher education. These are:

• to add to the sum of human knowledge and understanding;
• to inform and enhance teaching;
• to generate useful knowledge and inventions in support of wealth creation and an improved quality of life;
• to create an environment in which researchers can be encouraged, and given a high level of training.

53. It has been notable that over the last decade there has been no increase in real terms in Government funding for research. Research expenditure in the UK compares unfavourably with that in many competitor countries. Yet the evidence available to us shows the UK is among the world leaders in both the quality and the quantity of research outputs and is cost-effective in the use of resources. The importance of the research base to the national economy, and its cost-effectiveness, provides a strong case for increasing the present level of funding.

54. We have devised a series of principles for research funding allocation to support the purposes. The mechanisms for distributing funding should be clear and transparent. Excellence should be supported, and where research is funded, it should be funded adequately.

55. There is an urgent need to put right past under-investment in the research infrastructure. The resources must be found to enable the UK to maintain its place as one of the world’s major research centres. Without it, our universities will no longer be able to attract funding from industry or international institutions on the scale they have in the past. Nor will they continue to be valued partners with overseas institutions in research.

57. Funding should also support applied and regional research work. We think that it is in the national interest to bring industry and higher education into stronger partnership in both research and its exploitation, for their mutual benefit. This should be encouraged by the Government.

Recommendation 34
We recommend:

• to the Government that, with immediate effect, projects and programmes funded by the Research Councils meet their full indirect costs and the costs of premises and central computing, preferably through the provision of additional resources;
• to the Funding Bodies that the next Research Assessment Exercise is amended to encourage institutions to make strategic decisions about whether to enter departments for the Exercise or whether to seek a lower level of non-competitive funding to support research and scholarship which underpins teaching;
• to the Government that an Industrial Partnership Development Fund is established immediately to attract matching funds from industry, and to contribute to regional and economic development;
• to the Government that it promotes and enables, as soon as possible, the establishment of a revolving loan fund of £400 to £500 million, financed jointly by public and private research sponsors, to support infrastructure in a limited number of top quality research departments which can demonstrate a real need.

58. To obtain the best use of resources, human and physical, stronger arrangements are required to promote joint and collaborative activities by institutions and interdisciplinary work.

59. There is a need for better support for research in the arts and humanities and propose the establishment of an Arts and Humanities Research Council

60. For research students, there is need for a code of practice to guide institutions and inform students on what they can reasonably expect. We endorse the proposals made to that end in the ‘Review of postgraduate education’ chaired by Professor Martin Harris.

The local and regional role of higher education

61. Higher education is now a significant force in regional economies, as a source of income and employment, in contributing to cultural life, and in supporting regional and local economic development. This is brought out strongly in the report of our Scottish Committee: it is no less recognised in Wales and Northern Ireland. In England, regional consciousness varies, but we recognise the significance of the contribution of higher education to the localities and wider areas in which they are situated.

62. The contribution of individual institutions to regions and localities is diverse. It includes support through research and consultancy, attracting investment and providing new sources of employment, meeting labour market needs, supporting lifelong learning, and contributing to the quality of life as centres of culture.

63. As part of the compact we envisage between higher education and society, each institution should be clear about its mission in relation to local communities and regions. We note that the Government is likely to create regional chambers which will develop an economic strategy for regions and establish regional development agencies.

Recommendation 36
We recommend to the Government that institutions of higher education should be represented on the regional bodies which it establishes, and that the Further Education Funding Council regional committees should include a member from higher education.

64. We make proposals that higher education institutions should be able to bid for regional sources of funds, to enable them to be responsive to the needs of local industry and commerce, and should seek ways of giving firms, especially small and medium sized enterprises, easy and co-ordinated access to information about higher education services in their areas. We also make recommendations designed to help foster entrepreneurship among students and staff in higher education.

Communications and Information technology

65. Throughout our report we identify scope for the innovative use of new Communications and Information Technologies (C&IT) to improve the quality and flexibility of higher education and its management. We believe these give scope for a reduction in costs. In the short term, implementation requires investment in terms of time, thought and resources, and we make recommendations about how this might be achieved.

66. The full exploitation of C&IT by higher education institutions will require senior management to take an imaginative leap in devising a strategy for their institutions which can bring about this change. The Funding Bodies and the Government can help to encourage such a development.

67. The UK already enjoys a good information technology infrastructure, and we make recommendations about how this might be completed and maintained. The main challenge for the future is to harness that infrastructure, together with high quality materials and good management, to meet the needs of students and others.

68. The use of new technologies for learning and teaching is still at a developmental stage but we expect that students will soon need their own portable computers as a means of access to information and for learning via a network. We are also aware that students will need access to high quality networked desktop computers that permit the use of the latest multi-media teaching materials and other applications.

Recommendation 46
We recommend that by 2000/01 higher education institutions should ensure that all students have open access to a Networked Desktop Computer, and expect that by 2005/06 all students will be required to have access to their own portable computer.

Staff in higher education

69. The health of higher education depends entirely on its staff, whether academic, professional or administrative. There is concern among staff that they have received neither the recognition, opportunities for personal development, nor the rewards which their contribution over the last decade merits. Over the next 20 years, the roles of staff are likely to change, as they undertake different combinations of functions at different stages of their careers. To support and prepare staff for these new working patterns, more focused and appropriate training and staff development activities will be needed.

• review and update their staff development policies to ensure they address the changing roles of staff;
• publish their policies and make them readily available for all staff;
• consider whether to seek the Investors in People award.

70. To achieve world class higher education teaching, it should become the norm for all permanent staff with teaching responsibilities to be trained on accredited programmes.

Recommendation 48
We recommend to institutions that, over the medium term, it should become the normal requirement that all new full-time academic staff with teaching responsibilities are required to achieve at least associate membership of the Institute for Learning and Teaching in Higher Education, for the successful completion of probation.

71. In this era of continuing change the rewards offered must be sufficient to recruit, retain and motivate staff of the required quality. Recent evidence suggests that the majority, but by no means all, of staff in higher education are paid substantially below comparable private and public sector rates. On the other hand, there is evidence of an increase in the ratio of senior lecturer to lecturer posts, which may have offset a relative decline in academic salary levels. There is, however, growing concern about the present arrangements for determining pay and conditions of service. Central pay bargaining is under strain, as many institutions feel the need to take decisions in relation to their own circumstances rather than collectively. Others argue for maintaining national bargaining, a statutory pay review body or a standing review body.

72. Whatever view may be taken of the various options, the issue of remuneration should not be looked at in isolation. Significant changes will be needed as higher education responds to changing needs and opportunities. To the extent that higher levels of remuneration may be justified, there is the question of how institutions can meet the cost. The employment framework of all higher education staff, not just academics, needs to be addressed. These are material issues and we think the time has come for a review of the whole framework within which pay, conditions of service, work practices and the use of human resources can be settled. Our main report suggests terms of reference for such a review.

Management and governance of higher education institutions

73. The effectiveness of any organisation depends upon the effectiveness of its management and governance arrangements. We have identified three principles to underpin management and governance in higher education institutions. These are that:

• institutional autonomy should be respected;
• academic freedom within the law should be protected;
• governance arrangements should be open and responsive.

74. Although institutions have made impressive improvements in efficiency in the face of a dramatic fall in public funding per student over the last 20 years, the challenge to find new and better ways of doing things will continue and intensify. Some institutions currently fall far short of the performance of the best. Our main report considers how institutions might make better use of their staff, their estates, their equipment and other resources.

75. Over the next 20 years, communications and information technology will provide increasing opportunities to improve institutional effectiveness and efficiency. A continuing challenge to management will be to realise the full potential of such systems.

76. We are conscious of the enormous contribution that members of governing bodies make to institutions. They serve higher education well. But we are also aware that there is great diversity in governance arrangements, and sometimes a lack of clarity. Although we do not seek uniformity, we believe that institutions may often be able to achieve greater clarity and effectiveness in the way they govern themselves. We make recommendations to this effect. In particular, we propose a code of practice on governance, and, as part of that, we think that, as a general rule in the interests of effectiveness, membership of a governing body should not exceed 25. To gain maximum benefit from the work of governing bodies, we see a need for them to review their own performance, along with that of their institution.

• its own effectiveness and, where there is in excess of 25 members, show good reason why a larger body is needed for its effectiveness;
• the arrangements for discharging its obligations to the institution’s external constituencies;
• all major aspects of the institution’s performance, including the participation strategy.

The outcomes of the review should be published in an institution’s annual report. The Funding Bodies should make such a review a condition of public funding.

The pattern of institutions which provide higher education

77. The names and distribution of institutions are important matters that go to the heart of the capacity of the system to deliver higher education. For the future pattern of institutions to have public confidence, it should be guided by a number of principles: the need for diversity; institutional autonomy; responsiveness to national need; allowance for the development of individual institutions; the need for access across the country; and the need for proper economy and quality of provision.

78. We support the existing diversity between institutions, believing it to be a considerable strength in responding to the diverse needs of students as participation in higher education widens. We recommend that funding arrangements should reflect and support such diversity. Notwithstanding this, diversity must not be an excuse for lower standards or poor quality provision for students. We believe there should be greater control on the use of institutional titles, so that students, employers and others are clear about the status of institutions. We make recommendation on this issue and on the use of the title ‘university’.

79. We considered the special role of further education colleges in providing sub-degree higher education, and believe that growth and transfer of this provision to these colleges should be encouraged.

• more sub-degree provision should take place in further education colleges;
• higher education provision in further education colleges should be funded directly;
• there should be no growth in degree level qualifications offered by further education colleges.

80. We have considered the case for establishment of additional universities, and concluded that there should be a systematic decision-making process for deciding whether individual cases are reasonable.

81. Many of those giving evidence advanced the case for greater collaboration between institutions to improve effectiveness and efficiency throughout the sector. We found no obvious external factors that were discouraging institutions from collaborating, and found many examples of such practice. However, given the importance of collaboration, it will be important that there are no unnecessary barriers to it.

Recommendation 68
We recommend to the Funding Bodies and the Research Councils that they review their mainstream teaching and research funding arrangements to ensure they do not discourage collaboration between institutions; and that, where appropriate, they encourage collaboration. We recommend to the Funding Bodies that they be prepared to use their funds on a revolving basis, bringing forward and offsetting annual allocations in support of collaboration which has a strong educational and financial rationale.

The funding requirement

82. We have looked critically at both the short and long term funding requirements of the higher education sector.

83. The present public spending plans for higher education assume a reduction in real terms of expenditure per student of 6.5 per cent over the two years 1998-99 and 1999-2000. This is in addition to the more than 40 per cent reduction achieved since 1976. Furthermore, the Government decided, from 1995-96, to reduce substantially capital funding for equipment and the refurbishment of institutions’ estates. We have considered how far this is sustainable without significant damage to the quality of the student experience and to the research base. We have concluded that institutions should be able to manage a one per cent a year real reduction in funding per student over the next two years; a 6.5 per cent reduction would damage quality.

• an alleviation of the proposed cut in funding per student;
• infrastructure requirements;
• changes to existing student support levels;
• the resumed growth in student numbers we have recommended.

85. In total, we estimate that an additional £350 million in 1998-1999 and £565 million in 1999-2000 is required.

86. For the long term, we have identified six elements requiring additional expenditure if the higher education system is to develop effectively over the next 20 years. These are:

• an expansion of student numbers to allow around 45 per cent of young people to participate full-time and corresponding increases in the numbers of mature students, postgraduates and those who study part-time;
• providing part-time students with better support and thereby encouraging growth in lifelong learning;
• adequate infrastructure;
• proper funding to support all the purposes of research and for an Arts and Humanities Research Council;
• improving maintenance support for students, including larger Access Funds;
• increasing higher education pay in line with earnings elsewhere in the economy.

87. We think it right that levels of student support should be kept under review to avoid exacerbating the financial problems which some students already face.

Recommendation 70
We recommend to the Government that it reviews annually the total level of support for student living costs taking into account the movement of both prices and earnings.

Who should pay for higher education?

90. There is widespread recognition of the need for new sources of funding for higher education. The costs of higher education should be shared among those who benefit from it. We have concluded that those with higher education qualifications are the main beneficiaries, through improved employment prospects and pay. As a consequence, we suggest that graduates in work should make a greater contribution to the costs of higher education in future. Employer contributions to higher education and training should mainly take the form of a contribution to the cost of continuing education and training for their employees.

91. The state should also remain a major source of funding for higher education in the future because:

• it has a direct interest in ensuring that participation in the UK matches that of its competitors;
• it needs to ensure that tomorrow’s workforce is equipped with the widest range of skills and attributes;
• it must ensure that access to opportunities for individuals to benefit from higher education is socially just;
• it needs to secure the economic and cultural benefits which higher education can offer the whole nation.

92. We have noted the Government’s desire, over the long term, to increase the proportion of national wealth devoted to education and training and believe that higher education should share in this.

Recommendation 71
We recommend to the Government that, over the long term, public spending on higher education should increase with the growth in Gross Domestic Product.

Funding learning and teaching

93. Public funding for tuition currently flows to institutions via block grants from the Funding Bodies and tuition fees for full-time undergraduate students which are paid through those students’ mandatory awards. Over the long term a greater proportion of public funding should follow informed student choice so that institutions have greater rewards for responding to that demand.

Recommendation 72
We recommend to the Government that it shifts the balance of funding, in a planned way, away from block grant towards a system in which funding follows the student, assessing the impact of each successive shift on institutional behaviour and the control of public expenditure, with a target of distributing at least 60 per cent of total public funding to institutions according to student choice by 2003.

94. Institutions told us that the suddenness with which funding changes were introduced were sometimes almost as difficult to manage as the required reductions in public funding. We believe that greater stability would enable institutions to plan more effectively.

Recommendation 73
We recommend to the Government that the public funding for higher education institutions should be determined on a rolling three year basis.

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