The future of universities in a knowledge economy · the current global downturn, university graduates are more likely to be employed than non graduates; and ... higher ambitions

HIGHER AMBITIONS

The future of universities in a knowledge economy

EXECUTIVE SUMMARY

BIS - higher ambitions Exec Summary:BIS - higher ambitions Exec Summary 3/11/09 10:42 Page 2

The UK is home to a disproportionate

share of the world’s leading research

universities. With one per cent of the

world’s population the UK achieved

12 per cent of the world’s scientific

citations in 2007/08. The UK arts and

humanities community published

33 per cent of the world’s output in

the period 2006 to 2008.

This research excellence has beenaccompanied by a sustained increase in student numbers. In 1997 921,000students in all categories entered highereducation. In the current year that figurehas risen to over 1.1 million. Within thattotal there has been a particularlynoticeable increase in the number ofmature students, most of whom havehad the chance to experience highereducation for the first time.

This progress has been supported by a sustained increase in investment. By 2010-11, total funding for institutionswill have doubled from 1997 levels.

Investment in higher education has paid significant dividends. Even duringthe current global downturn, universitygraduates are more likely to beemployed than non graduates; andgraduates earn substantially more overtheir lifetime than non-graduates1.Higher education is a successful sector

of the economy, in which we enjoycompetitive advantage over developedand developing nations. The mostrecent estimate is that UK universities’economic output is £59 billion a year,and amounts to 2.3 per cent of UKGDP2. The sector is expanding its role asa provider of education to a growingworld market consisting of hundreds of millions of new learners who wish to study in English.

The success of the last decade is notsimply the achievements of the ancientinstitutions and the leading researchcentres. Many of the most encouragingdevelopments have come in new andtransformed institutions which arepursuing excellence in particular fieldsand building creative links to localcommunities and businesses aroundthe country.

Our success in higher education isrooted in a commitment to institutionalautonomy within a framework of sharedvalues and goals. Freed to define theirown strategies for achieving corenational priorities, our universities andcolleges have innovated and adapted to new ways of serving students andcontributing to our national life.

Executive SummaryHIGHER AMBITIONS | The future of universities in a knowledge economy

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1 “Over their working life graduates earn, on average, comfortably over £100,000 more than an individual whose highest qualification is 2 or more A-levels, net of taxesand in today’s valuation”, based on a number of analyses undertaken inside and outside BIS..

2 The impact of universities on the UK economy, UUK 2009

British higher education is a success story. Over the last decade we have pursued the twin objectives of supporting excellence and widening access, and these have proved to be complementary and mutually reinforcing.


The challenge is to maintain the progress we have made. In a knowledge economy, universities are the most important mechanism we have for generating and preserving,disseminating, and transformingknowledge into wider social andeconomic benefits.

They are crucial, too, as the providers of life chances for individuals in anenvironment where skills and the ability to apply those skills are essentialpreconditions for employment.

The demand for higher educationcontinues to grow but our participationrate, though improved over the lastdecade is still below that of many other developed economies. Access to higher education remains significantlycorrelated with parental income andwealth. Too many people with theability to benefit from higher educationare still not entering the system.

Meeting these challenges is made all the more important by the currenteconomic circumstances and the need to renew our economic base.Universities have a vital role to play in that process. But the constraints on public finances will make itimpossible to sustain the growth in public spending on universities seen over the last decade.

This is by no means the only change incircumstances which universities face.Demography, advances in technology,the increasing importance of knowledgeand intellectual property and theincreasingly international nature of somany activities including educationitself are all altering the nature and formof higher education. Universities withinthe UK are already part of numerousEuropean and global networks and wehave much to gain from the continueddevelopment of such links.

That is the context which shapes theproposals contained in Higher Ambitions.

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We set out proposals in six main areas.

How we will ensure that all those who have the ability to benefit can get access to higher education

This challenge was framed by AlanMilburn’s recent report3, and HigherAmbitions is an important part of theGovernment’s response. Because higherskills significantly influence life chancesand earning potential, wider and faireraccess to higher education is a questionof basic social justice. It is in theinterests of our society that there are no caps on talent in Britain. Our universities have succeeded inwidening access to poorer studentsover the last decade, but this progresshas been uneven across the system,with our most selective institutionsseeing only modest increases. Fairer access for educationallydisadvantaged but able UK pupils has to remain a key part of how our worldclass universities see their missions.

Since 1998 the UK participation rate forhigher education has slipped from 7thin the OECD to 15th. This is becausealthough we have grown, others havegrown faster4. The Government remainscommitted to the goal that at least 50%of young people should enter highereducation. However, this has nevermeant that 50 per cent of the populationshould enter higher education directlyfrom school to study on a conventionalthree year degree programme. We aimto widen participation through theexpansion of the number of adults atuniversity and by promoting a broaderrange of course models alongside thethree year degree. This has been aproblem in the past: the number ofstudents on sandwich courses, forexample, has fallen by four per centsince the middle of the last decadeduring a period when overall studentnumbers have increased by around 32per cent, an outcome that is not in thelong-term interests of either students oremployers. In order to attract a greaterdiversity of students, more part-timestudy, more vocationally-basedfoundation degrees, more work-basedstudy and more study whilst living at home must be made available. This is a core aim of these proposals,and our wider skills strategy.

HIGHER AMBITIONS | The future of universities in a knowledge economy

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3 Unleashing Aspiration: The Final Report of the Panel on Fair Access to the Professions Milburn 20094 Education at a Glance 2009

Our proposals In this document we set out our strategy for sustaining the strength of higher education in this increasingly demanding and competitive environment.


This goal reflects some basic realitiesabout the UK’s demographic and labourmarket profile. Around three quarters ofthe UK workforce of 2020 have alreadyleft compulsory education5. The UKretains a large pool of just under sixmillion workers with qualifications atlevel three (equivalent to A-levels instandard) but no experience of highereducation6. Raising the potential of ourworkforce must involve drawing moreof these people into higher education,while also strengthening the skillspipeline that helps young people andadults gain skills and qualifications atevery level. Widening access meansbuilding new stronger ladders ofopportunity from apprenticeships to advanced apprenticeships and new technician qualifications intofoundation degrees and othervocational higher educationprogrammes. There should be morebridges between further and highereducation.

This requires a major change in theculture of our higher education systemwhere the focus of expansion hashitherto been in three year full timedegree courses. Reflecting demandfrom learners and employers, thosecourses will continue to play a centralpart. However, the next phase ofexpansion in higher education willhinge on providing opportunities fordifferent types of people to study in awider range of ways than in the past.The focus will therefore be on a greaterdiversity of models of learning: part-time, work-based, foundationdegrees, and studying whilst at home.

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5 BIS analysis of Government Actuary’s Department population data 20076 Labour Force Survey, Q2 2009


We propose four key changes in

this area:

1) We will improve the advice andencouragement that students receiveearlier in their education with respect to setting their sights on university.

Universities are increasingly involved in shaping the ambition and personalperformance of young people who havehad no family experience of highereducation, and in improving the way inwhich schools themselves bring out thebest in their pupils. Good advice iscrucial: the availability of study andtraining options and the choices pupilsmake can affect their later courseoptions and life chances. We willstrengthen our partnership with theDepartment for Children, Schools andFamilies, (DCSF) building on thestrategy published by DCSF in October 2009 to guarantee that all young people get advice thatencourages them to strive forchallenging goals, and that teachershave ambitious expectations for them.

We announced in the NewOpportunities White Paper a guaranteethat high performing pupils from lowincome backgrounds will have astructured package of assistance to help them progress to higher education.Schools and colleges working in closepartnership with higher educationinstitutions are key to delivering thiscommitment. We will publish, early in 2010, our plans for delivering thiscommitment.

2) Many universities are developingnew ways to use contextual data in theiradmissions procedures to assess theaptitude and potential to succeed of those from poor backgrounds. We believe this is a valid approach and hope that all universities willconsider it.

In assessing candidates, universitiesalready expect to look not only at whatindividuals have achieved, particularlythrough their exam grades, but also attheir aptitude and potential to succeed.While the principle of universityautonomy means that Governmentdoes not interfere with any university’sadmissions procedures, we believe that the use of appropriate contextualcriteria could help to ensure that high-potential candidates are notmissed by the system.


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A

BC

D

E

F

A First degree full-time 1,108,685B First degree part-time 198,155C Other undergraduate full-time 123,320D Other undergraduate part-time 374,810E Postgraduate full-time 248,380F Postgraduate part-time 252,755

Student by mode and level of study


3) We are asking Sir Martin Harris, theDirector of Fair Access, to consult ViceChancellors and advise the Governmentby Spring 2010 on further action thatcould be taken to widen access to highlyselective universities for those fromunder privileged backgrounds – and toensure that measures for wider accessare prioritised most effectively and donot suffer in a time of greater fiscalconstraints. His report will be availablein time to influence the conclusions ofthe Fees Review.

Working with universities, he will look at how best individual universities can set and achieve targets for themselves. He will advise on how best to promotethe partnership of schools anduniversities to identify and mentor the most talented young people from an early age. He will also advise onwhether the money currently used byuniversities under access agreements,mainly spent on bursaries for theirstudents, can be better targeted in order to give more effective support to fair access.

4) We will expand new types of highereducation programmes that widenopportunities for flexible study foryoung people and adults and reflect thereality of the modern working lives.

We will give priority to growing adiverse range of models of highereducation. These include options suchas part-time and workplace-basedcourses aimed particularly at maturestudents or those from non-conventional backgrounds. We will also encourage the further expansion of the successful foundation degree, a vocational qualification completed in two years designed jointly betweenemployers and higher education; andmore opportunities to progress fromApprenticeship programmes andvocational qualifications at Technicianlevel into higher education. There willbe an important role for furthereducation colleges as well as foruniversities in such provision – a rolethat will be set out in detail in ourforthcoming Skills Strategy7. We arecommitted to the enhancement oflocally accessible higher education that can create new opportunities forindividuals and their communities. This will be achieved, as resourcesallow, through innovative partnershipsbetween universities and furthereducation colleges, and by support fornew local higher education centresunder the New University Challengeinitiative.

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7 National Skills Strategy to be published by BIS later in 2009


How we will support universitiesin making an even biggercontribution to economic recovery and future growth

Alongside its social and cultural role,higher education is, and will continue to be, central to this country’s economicperformance in the twenty first century.It is the key mechanism through whichknowledge is generated, preserved andpassed on. It equips people for theincreasingly complex challenges of themodern workplace by teaching skillsand instilling intellectual curiosity andself-confidence.

This process of knowledge generationand stewardship is a public trust andimportant in its own right. However it isvital that universities use it to contributeto economic growth, both through the commercial application of theknowledge they generate and throughpreparing our people for the world ofmodern work. Building newpartnerships with business and industrywill provide an important channel forgenerating the financial resourcesuniversities need to fund furtherinvestment. And greater use of cuttingedge university research will improveour public services and public policy.

We propose four key changes in

this area:

5) We will ask the Higher EducationFunding Council for England (HEFCE) to devise new funding incentives todevelop higher education programmesthat deliver the higher level skills needed

We will give new priority to theprogrammes that meet the need forhigh level skills, especially for keysectors including those identified in theNew Industries New Jobs strategy ofApril. This will mean enhanced supportfor the ‘STEM’ subjects – degrees in thesciences, technology, engineering, andmathematics – and other skills thatunderwrite this country’s competitiveadvantages. There will be a greaterelement of competition betweenuniversities for funding, with thewinners being those universities whocan best respond to these evolvingeconomic challenges. We will invite the Funding Council to consult on howthese changes should be implemented.We accept that the effect of thesechanges in HEFCE’s approach tocontestable funding will vary betweenuniversities: increasing funding forsome and reducing it for others. To allow funds to be diverted to courses that meet strategic skills needs they will be diverted away frominstitutions whose courses fail to meethigh standards of quality or outcome.


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6) We will bring together universities,employers, HEFCE and the UKCommission for Employment and Skills(UKCES) to identify and tackle specificareas where university supply is notmeeting demand for key skills, and willexpect all universities to describe howthey enhance students’ employability

There can be no room in the system forvocational programmes that do notconstantly evolve to meet changingbusiness needs. There will be a newcentral role for the UK Commission forEmployment and Skills to advise onareas where there is an insufficientsupply of graduates in particulardisciplines, and also cases whereuniversity programmes are failing toreflect changed business requirementsor the priorities articulated by employer-led bodies such as Sector Skills Councils(SSCs) and Regional DevelopmentAgencies (RDAs).

We will ask all universities to publish astatement on how they promote studentemployability. Universities must be freeto define what works best for studentsin different courses and differentinstitutions. But it is a top concern forbusiness that students should leaveuniversity better equipped with a wider range of employability skills. All universities should be expected to demonstrate how their institutionprepares its students for employment,including through training in modernworkplace skills such as team working,business awareness, andcommunication skills. This informationshould help students choose coursesthat offer the greatest returns in termsof graduate opportunity.

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7) Our expectations of business willcontinue to rise: they need to be activepartners with universities, not passivecustomers.

As the key definers of the skills needs ofour economy and the key beneficiariesof the skilled workers produced byhigher education, businesses have acrucial role in the funding and design of programmes, in the sponsorship ofstudents, and in offering workplacements and practical experience for students. The majority of businessesthat invest in high level skills do notmake enough use of higher education.This should change: businesses shouldtap the resources available inuniversities more effectively, anduniversities should become moreflexible in providing for businessdemand. We welcome the commitmentsmade by business in the CBI’s recentreport on higher education8. The rolethat business people play as membersof University Boards of Governors, as members of University AdvisoryCouncils and in influencing courseprovision through employer led SectorSkills Councils is of great importanceand will become greater in future.

8) We will conclude a review into thefuture of postgraduate provision.

Postgraduate qualifications, both fromtaught and research courses, areincreasingly a necessity for careers inthe public and private sectors alike. As part of our New Industry, New Jobsstrategy, we need to strengthen the flow of skills at the highest level into key sectors of the economy. Today’spostgraduates are also tomorrow’sleading academics. Increasing feeincome from overseas postgraduatestudents is of crucial importance to thefinancial planning of many institutions,as well as enriching our internationalnetworks. All of this makespostgraduate provision a criticalstrategic issue for the sector and thecountry. Professor Adrian Smith isworking with leading figures in thesector to review postgraduate levelhigher education, to ensure that itmeets both the sector’s and theeconomy’s needs for skills at the highestlevels. The independent review ofstudent fees will have access to thisreview’s findings before it finalises itsown conclusions.


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8 Stronger together: Business and universities in turbulent times, CBI 2009


How we will strengthen theresearch capacity of ouruniversities, and its translationinto economic impact

After a decade of unprecedentedinvestment, our universities are amongthe best in the world for research. Since 1997, the Government has doubledinvestment in the research base, with theScience and Research budget due torise to unprecedented levels of almost£4 billion by 2010/11. Ring fencing of the Science and Research budget hascreated a climate of confidence in ourresearch base. Our challenge now is toreinforce this strength and to developfurther our capacity to translate thisscientific excellence into economicbenefits. There will be no question ofcompromising our position in pureresearch, and we recognise that the wayin which research drives commercialdevelopment is often unpredictable.

We make three key proposals in

this area:

9) In a more challenging climate forresearch, with tighter fiscal constraintsand increased competition from othercountries, we will need to carefullyprotect the excellence of our researchbase. This will require a greater focuson world-class research and greaterrecognition of the potential benefits of research concentration in key areas.

Excellence must remain the definingbasis for allocating research funding.Especially in areas such as advancedscience, limited resources mean thatpublic investment in the UK must beprioritised on strengthening research

centres with world-class capability. This will include further development of multidisciplinary centres bringingtogether many areas of expertise, andbuilding relationships between teams in universities and industry.

We must use scarce resources well. In future this should mean more researchconcentration, not less, especially in the high cost scientific disciplines. In a diverse higher education system, not every institution should feel thatmaximising its success in the researchassessment exercise or recruitingdoctoral students is central to its mission.There are pockets of research excellenceacross a very wide number ofinstitutions, but a more sustainablemodel for the future may involve newforms of collaboration betweenuniversities so that the best researcherscan cooperate rather than competeagainst each other for scarce funds.

10) We are establishing strong newincentives to increase the economic and social impact of research.

The new Research ExcellenceFramework9, which will drive HEFCE’sallocation of the research block grant,will for the first time explicitly assessthe impact of past research on theeconomy and society. Those institutionsthat can demonstrate a track record ofdelivering impact from their researchwill be rewarded. It will also encouragegreater mobility of researchers betweenacademia and industry. This will help usunderstand and reinforce over time theway in which different funding choicesare creating economic impact.

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9 The Research Excellence Framework (REF) is the new system for assessing the quality of research in UK higher education institutions (HEIs). The first REF exercise is due to be completed by HEFCE in 2013.


11) We will support stronger long term relationships between businessand universities.

Interaction between universities andbusiness has increased significantlyover the last decade. We will build on this with continued investment incollaborative research via the ResearchCouncils and the Technology StrategyBoard. We will also build on the successof the HEFCE Higher Education

Innovation Fund which has supportedthe development of links betweenbusiness and universities. Our primarymotivation for supporting this researchcommercialisation and knowledgeexchange is to generate economic andsocial benefits for the nation, not simplyto raise revenue for institutions. We will encourage universities to seek greater use of shared services formanaging and commercialising theirintellectual property.


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Sources of finance for UK universities and colleges 2007–08


How we will promote excellentteaching for all students in highereducation, with universitiescompeting to attract students onthe basis of the excellent servicethey provide

The quality of the higher educationprovided by our universities standscomparison with the best in the world.However, there are a number of ways in which it could be further improved to ensure the best possible studentexperience, particularly throughmaintaining high quality teaching. The Government’s proposals were set outin our October 2009 response to the reportfrom the Innovation, Universities, Scienceand Skills Select Committee, Students andUniversities. Excellence in teaching shouldbe recognised and rewarded. Alongsideexcellence in research, we welcome the trend in increasing numbers ofuniversities of recognising excellence in teaching – for instance through theappointment of teaching professors.

We take very seriously any public concernover the quality of the student experiencein higher education. A poor qualityservice to students by any institutionshould not be tolerated and we supporta more active and transparent approachto investigating complaints aboutstandards. There will be the opportunityfor all involved to examine how best todevelop and simplify the existing qualityreview process as the current cyclecomes to an end. It is also important toensure that potential students have thebest possible information on the contentof courses and on the value in academicand employment terms of specificqualifications.

We propose two key changes in

this area:

12) All universities should publish astandard set of information setting outwhat students can expect in terms of thenature and quality of their programme.

This should set out how and whatstudents will learn, what that knowledgewill qualify them to do, whether they willhave access to external expertise or experience, how much direct contactthere will be with academic staff, whattheir own study responsibilities will be,what facilities they will have access to,and any opportunities for internationalexperience. It should also offerinformation about what students onindividual courses have done aftergraduation. The Unistats website willcontinue to bring together information ina comparable way so that students canmake well-informed informed choices,based on an understanding of the natureof the teaching programme they canexpect, and the long-term employmentprospects it offers. We will invite HEFCE,the Quality Assurance Agency for HigherEducation (QAA) and UKCES to workwith the sector and advise on how thesegoals should be achieved.

13) We will support universities’ work tostrengthen the role of the externalexaminer system.

The external examiner system is a keycomponent in ensuring consistentstandards across the sector. Sector-ledplans to reinforce its authority and rolewill help guarantee confidence that noone institution is devaluing the currencyof the degree award and will provide astronger assurance of the quality of theeducation being provided.

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How we will further strengthenthe role of universities at theheart of our communities andshared intellectual life, and as oneof the key ways in which weengage with the wider world

Universities have a vital role in ourcollective life, both shaping ourcommunities and how we engage withthe rest of Europe and the wider world.They play a huge role in ourcommunities through the provision ofcultural and sporting amenities and inpassing on and preserving a set ofshared societal values, includingtolerance, freedom of expression and civic engagement. They have the capacity to provide intellectualleadership in our society, in areas such as the transition to a low carboneconomy.

14) We will build on the contributionthat universities have made, inpartnership with Regional DevelopmentAgencies and local business, to regionaleconomic development

To sustain the role of universities inurban renewal and regeneration, theGovernment will protect the freedomsthat higher education institutionscurrently enjoy, within the framework of existing capital and investmentapproval processes, to devise their own business plans and borrowcommercially to fund newdevelopments. The Governmentsupports the role that RegionalDevelopment Agencies play to providecapital for university schemes that theyjudge to be of high economic value tothe locality and region. The Governmentalso believes that RDAs have a key roleto play in working with business at localand regional level to support knowledgetransfer activities and deepen universitylinks with local and regional businesses:this is crucial to improving the quality of management in Britain and Britain’sfuture success as an innovation economy.


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All universities are major contributors to the regions where they are located.They are large employers and thestudents they attract bring revenue tolocal businesses. Many universities also see themselves as important civicinstitutions in their city and region: this role is to be praised and should beenhanced. The Government welcomesthe role that universities play inengaging their local businesscommunity and strengthening thequality of local civic leadership. They are usually active contributors tothe economic development strategies of Regional Development Agencies and local authorities, supporting thecreation and growth of local businesses.Their building programmes can beintegral to wider regenerationprogrammes. The projects supported by HEFCE’s Economic ChallengeInvestment Fund illustrate the manyways that universities can help theirareas get through the economicdownturn.

Local engagement is also crucial to theuniversity function of extending accessto higher education among socialgroups and in areas where it isunacceptably low. Public funding hasalready supported the creation of newuniversities in parts of the country, like Cornwall and Cumbria, where no university previously existed. The Government also welcomes highereducation provided by and with FEcolleges and other providers as a meansof promoting easier and wider access.

Universities are one of the key ways inwhich people from outside Britainengage with us, and through which weengage with the world. Our universitiesneed to be strongly committed tointernationalism; attracting studentsfrom abroad; collaborating withinstitutions overseas; and bringing theirexpertise to bear on global challenges.They should instil a sense ofinternationalism in students by teachingEuropean and global perspectives andencouraging language learning andstudy abroad.

15) We will champion the internationalstanding of our universities.

UK higher education is well regardedinternationally. We attract high qualitystudents, researchers and universitystaff from around the world. Currentlythere are 340,000 foreign students in the UK from 239 different countries; theUK is second only to the USA as adestination for such students. One sixthof our academic staff are from outsidethe UK, and 90 per cent of ouruniversities have international researchlinks. The net annual contribution to theUK’s national income made byinternational (non EU) students inhigher education is estimated at £5.5bn.

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Individual institutions have built strongpartnerships with China, India, andother countries. However, the strengthof the international market for highereducation means that many othercountries are competing with us. To retain their position, our universitiesneed to demonstrate strengths inresearch and knowledge transfer as well as student recruitment, growinglong-term strategic partnerships in key countries.

Different institutions will pursue theirown priorities, but the Government canhelp communicate a strong “UK HigherEducation” brand, and align it with theGovernment’s diplomatic and culturalagenda, and with our international trade strategy led by UKTI. We have just established a new InternationalEducation Research Advisory Forum,chaired by the Minister of State forHigher Education, to bring togetherGovernment departments and agencies,the UK’s devolved administrations, anduniversities. Its purpose is to strengthenlinks between the British Council, UKTI,the Research Councils, and BIS’ ownScience and Innovation Network, so thatthe UK presents its strongest possiblestory to potential international partners.

16) We will empower our universities tobe world leaders in the growing marketin transnational education based on e-learning

We will support the new task force ledby Lynne Brindley, Chief Executive ofthe British Library, to help UK highereducation remain a world leader inonline learning, and grow its marketshare by 2015. The task force willidentify opportunities for investmentand innovation within and betweenuniversities and colleges, and with theprivate sector, in the development ofonline learning, including the buildingof critical mass. Through HEFCE, we will be prepared to provide seedcornfunding on a competitive basis foruniversity-private sector partnershipswhich will strengthen our market position.

We believe that in a rapidly expandingglobal market, institutions based herehave a unique opportunity to provideeducation in many different forms. The UK’s advantages in both researchand teaching are supported by ourestablished strengths in bothaccreditation and educationalpublishing. The potential to developinternational education throughpartnerships with broadcasters and internet service providers isconsiderable, and in our view will shapeand strengthen the higher educationsector over the coming decade.


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How we will ensure that ouruniversities continue to maintainexcellence, even under tighterpublic financial constraints

Our challenge is to nurture a highereducation system, responsive to thedemands of both undergraduate andpostgraduate training, embedded andintegrated in a wider education andskills framework and capable ofequipping all students with thecapabilities and confidence to prosper.

We must achieve these goals in aneconomic environment that has beentransformed by the banking crisis andthe downturn. Britain must rebuild itseconomic growth and invest in the skillsand competitive strengths that willunderwrite a sustainable recovery and a balanced future economy with astrong mix of services and modernmanufacturing. It will have to do this in an environment of fiscal constraint.

Universities have enjoyed a benignfinancial climate over recent years.Growth based so heavily on statefunding cannot continue and thisconfronts government and universitieswith a series of challenges. Maintainingexcellence in both teaching andresearch is key. We recognise that percapita funding is important but also thatin the current circumstancesmaintaining that level through publicexpenditure alone will be extremelydifficult. That is why the development of a diverse set of funding streams is important if the quality of highereducation is to be maintained andimproved.

Our universities need to continue tobenchmark themselves against the best in the world, and the highestexpectations of their localities andregional economies. Our world classuniversities are unique national assets,and must be recognised as such. Alongwith this recognition come reciprocalresponsibilities. We need to treat theseworld class institutions for what theyare, and the institutions themselvesneed to recognise their own obligationsto UK undergraduates, in terms ofexcellent teaching and fair access on merit and potential, regardless of family background.

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The rest of the sector contains manyexamples of excellence of a differentkind. Sustaining a diversity ofexcellence through a period ofincreased competition and publicspending constraint will require eachinstitution to develop its own distinctivemission, and for funding to be focusedon investing in and nurturingexcellence. Universities may need towithdraw from activities in which theycannot achieve excellence in order tofocus on the areas where they can. The Government will need to directfunding more strategically if theresources provided are to achievepublic policy goals. In future, newpriorities will be chiefly supported by redistribution of existing funds andleverage of private investment ratherthan provision of new money. We acknowledge HEFCE’s role inactively monitoring the financial health of institutions and offeringsupport where necessary.

The universities that succeed best arelikely to be those with strong leadershipthat has the confidence to challengevested interests. Universities will needto control costs, including pay. They willneed to be more flexible in their payarrangements, to respond to localconditions, promote career paths that span business and academe, and compete for top talent in theinternational arena.

Universities will need to seek out othersources of funding, from overseassources as well as domestic ones. The experience of the last decadesuggests there is considerable capacityto do this: public funding for highereducation increased by 25 per cent inreal terms, while total university income has increased by over 50 per cent10. Thisnew money has come from creatinggreater economic benefits from theknowledge they generate or theteaching expertise they provide andfrom philanthropic sources of incomeand increased international earnings. It is also the result of the Government’sdecision to introduce variable fees,which has generated an additional£1.3bn of income into the sector,without any apparent negative impacton access11. In future the burden of financing highereducation’s diversity of excellence will need to be more equitably sharedbetween employers, the taxpayer, andindividuals.

17) Following the publication of theseproposals we will launch a review of the fees structure in Englishuniversities, as promised at the time of the establishment of variable fees for full time undergraduate students in 2004.

Higher Ambitions will provide importantcontext for the work of the independentreview. The focus of the review will bethe objectives of sustaining genuinelyworld-class institutions and fair accessto universities, while ensuring value formoney for the taxpayer.


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10 HESA data, 200911 HESA figures on participation in 2007/08 and UCAS figures for 2008/09 show record numbers of students participating in higher education, including record numbers

from lower socio-economic groups.


A strong university system is essentialto a country’s economic success and the vibrancy and depth of its intellectualand cultural life. Universities embodyboth our values and our aspirations. They play a huge role in ourcommunities through the provision of cultural and sporting amenities andin passing on and preserving a set ofshared societal values, includingtolerance, freedom of expression andcivic engagement. They shape how weengage with the rest of Europe and thewider world. At a time when publicinstitutions are under intense criticism,universities have an important role inrestoring the standards of our public life and in the renewal of trust in theworkings of a democratic society.

The aim of these proposals is to build a new national consensus betweenindividuals, government, and employersas to how our higher education systemshould be supported, adapted andexpanded. We can only hope to achievethis through effective partnerships withuniversities themselves. Indeed, whilewe have pointed to a number of thingsthat Government can do, either directlyor working with the funding bodies, theresponsibility for success lies principallywith higher education institutionsthemselves. The chief role of Governmentis to empower them to deliver.

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Conclusion: The heart of a knowledge economy and a civilised societyBritain’s universities are fundamental to our character as a country and to our standing in the world.


Department for Business, Innovation & Skills. www.bis.gov.ukFirst published November 2009. © Crown copyright. BIS/11/09/0.5k/NP URN 09/1452


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The future of universities in a knowledge economy · the current global downturn, university graduates are more likely to be employed than non graduates; and ... higher ambitions