The University Challenge.

The UNIVERSITY CHALLENGE

Sir Adrian Smith FRS

ERAF Lunch and Lecture, 8th May 2014

Let me begin by thanking the ERA Foundation for this opportunity to say a few words on the theme of “The University Challenge”. And it will be just a few words. Although we’ve already had lunch, I much approve of the old Czech proverb which asserts that sausages should be long but speeches should be short.

I’d also like to begin with a disclaimer. Andre Gide said something to the effect that one should admire those who seek after truth, but be very wary of those who think they’ve found it! In the context of UK universities, I want to flag to you a number of challenges that I feel it would be timely for interested parties such as yourselves to engage more closely in debating, as we move through the next twelve months towards an important general election. But, except for one or two issues where it will be obvious that I have a clear view, today for the most part I am just posing the questions – or, in many cases, repeating the kinds of questions and concerns that I regularly encountered during my time as Director General of Knowledge and Innovation in BIS.

However, before turning to those specific questions and concerns, I’d like to make one general point about the university sector in the UK that we should bear in mind: namely, the capacity shown by both individual institutions and the sector as a whole to evolve and adapt as the world around them changed.

Consider, for example, my own institution, the University of London. It was founded in 1836, to extend access to higher education provision in England beyond the narrow preserve of Oxford and Cambridge – an offering then only available to male adherents of the Anglican faith. In 1858 it was awarded a special charter by Queen Victoria, which created the External System, enabling the university to offer access to its courses and qualifications to individuals who could not physically come to study in London. Many centres grew up around the UK to provide local support for that external learning– for example, in Nottingham, Exeter, Sheffield, and many other cities. Ultimately, these acquired their own royal charters and became universities in their own right, just as the constituent colleges of the university have grown in size and reputation over the years and are now flourishing autonomous institutions in their own right. To get a sense of the scale of change, between 1902 and 1939 the number of internal students at the university grew from 2,000 to 12,000. It is currently around 120,000! Similarly, as the UK external role of the University of London diminished, so its global activity expanded dramatically. Today, there are over 54,000 students spread across over 180 different countries around the world, studying for the University of London degree on over 100 different programmes based on academic courses offered by our constituent colleges.

This is just one snapshot of the enormous changes that have taken place in the history and development of our universities. In the sector as a whole, we now have something approaching 50% of the 18-year old cohort entering higher education. When I went to university it was around 6%. In the system overall there are around 350,000 UK/EU full-time undergraduates, a number which hasn’t changed much over the past four years, despite dire warnings about the impact of coalition funding policies. However, and now let’s begin to note some possible causes for concern, the number of part-timers, which includes a significant percentage of more mature students, has dropped by 50% in the past three years! And when we look at the composition of postgraduate taught courses, the percentage of entrants from outside the UK has risen from 66% in 2005/6 to 74% in 2012/13. And it is interesting to reflect on the fact that the 26% of UK students in 2012/13 is very nearly matched by the 23% of the total who are from China! I will come back later to some issues around postgraduate taught courses.

First, some comments about the research landscape. Structurally, I have the impression that few people are arguing for any fundamental change to our current arrangements – the dual funding system, the seven research councils, the TSB, the Higher Education Innovation Fund (HEIF) and support of the national academies. Of course, there are gripes and whinges from time to time about decisions made within the system and occasional worries about ministers forgetting the Haldane Principle, but overall I think the concern is more about the levels of funding going in to the system than the system itself. And funding has to be a concern. In many ways, flat cash, ring-fenced protection of the research resource budget following the 2010 election was a triumph at the time. But over time – and now four years on – flat cash becomes inflation eroded and we have to worry about comparisons with the investments being made by our competitors. The Royal Society and others have argued that we must try to get a political consensus on a long-term (at least ten year) investment strategy and commitment. This is a vision and a cause I think many in this room might wish to throw their support and influence behind.

What are the key concerns going forward in the areas that relate more to students and to funding for teaching and learning? Well, for starters, higher education issues are simply much higher profile than they were a couple of decades ago. From the perspective of the individual, higher education is now for many inextricably linked with aspiration, with life changing and enhancing experience and with acquiring higher level job skills for the knowledge economy. From the perspective of society and the economy, higher level skills are seen as the key to wealth creation, to creativity and to competitiveness – as well the generic enhancement of civil society.

However, in a sense the increased perceived importance of higher education itself creates problems for the sector: there are many diverse stakeholders to respond to; this is a large area of taxpayer spend; there is an expectation that it will deliver to the economy and contribute to wider public goals, such as social mobility.

Against that background, let me summarise what seem to me the potential key areas for debate – not my own invention, but at least bubbling away beneath the surface if not already on someone’s political agenda. And it might be helpful to divide the issues somewhat crudely into those relating to “external” forces or shocks to the system and those which are “internal” to UK systems and processes. The key external elements seem to me to be first technological disruption and secondly global economic and social developments. The main internal issues seem to me to be first the potential continuing fiscal squeeze and secondly the relationships between higher education and business and industry – the latter covering particularly research and knowledge transfer, the supply of people and skills and the regional agenda (if there is to be one).

First, potential technological disruption. Let’s just take one example of how we may be seeing a shift from evaluating technology in terms of its impact on “how” we might do things differently, to actually fundamentally changing “what” we do. You’ve all by now heard of MOOCs – Massive Open On-line Courses – high quality, high tech delivery of free access to the world’s finest lectures and courses. This development has seen incredible growth over a very short time-scale. Within two years, the Stanford Coursera platform has gone from nothing to 7 million users, involving currently 108 higher education partners world-wide, offering over 700 courses. Our own experience in the University of London reflects this. We experimented with four course modules and within 3 months had over 200,000 “hits”. And this is all so new that we’re not even sure what questions to ask about the medium- and long-term impact on more conventional campus based higher education. In the short term, there are evolving new business models to address issues such as: how to monetise MOOCs? who delivers tangible outcomes, such as credits? what price bite-sized learning experience versus structured study for a degree?

New business models and potential reductions in the cost of delivering higher education are linked to an important aspect of the second external factor – the growth of higher education capacity in developing economies and increased competition in general in the global higher education market. There are very real potential threats here to the scope and scale of future UK universities recruitment of overseas students. In terms of fee income for taught courses, this is a threat both to the overall financial sustainability of institutions and to the viability of many (particularly postgraduate, and particularly STEM) courses, where overseas students contribute significantly to the critical numbers required. In terms of talent, this is a potential threat to many areas of the research base where PhD students and post-docs make vital contributions, not only to the research itself, but often through involvement in spin-offs and technology transfer. It is vital that we recognise the importance of being perceived as open and welcoming to overseas student talent. In the run up to the election, we must separate this issue from the general debate about immigration. The first step must be to remove student numbers from overall migration statistics and the related political angst. I hope this is something everyone in the room would feel able to argue for in the coming months.

Returning now to the internal challenges, the key issue is likely to be the sustainability or otherwise of the current student loans system. I think you will all be familiar with the headline numbers. The original estimate of the percentage of value of loans that would not eventually be repaid – the so-called RAB charge – was 28%. It now looks as though this needs revising upwards to something nearer 50%, although there are subtle dependencies here on things like wage growth over the next decades. Whatever the detailed merits of the arguments employed, this is an area that will certainly come under close scrutiny in the lead up to the election – both in terms of financial sustainability and the underlying assumptions that have to some extent been relatively unchallenged in recent years. Here are some of the challenges I would anticipate.

Why do we have a target of 50% of the age cohort entering undergraduate study at university, typically for a three year course (why?), often being subsidised to live away from home, even when an appropriate course is available locally? We all of course support ‘aspiration’ and the need for an abundance of higher level skills, but why not consider apprenticeships as an equally important route to these? Also, loans are available on an undifferentiated basis with regard to discipline studied: does this make sense? No-one believes any longer in detailed man-power planning, but have we really no interest in using financial incentives to influence the relative take up of disciplines, currently shaped largely by the whims of 17-year olds and their parents? Are there no national priorities that require influencing through the loan system? [A digression: of course, school choices depend on a number of other factors, including the supply of qualified teachers and an attractive curriculum. For this audience, it has to be a cause of major concern that there are both gender and state versus public school discrepancies in the take-up of A-level Physics – the pipeline to the physical sciences and engineering at university.] More fundamentally, the loan system and all the debate that surrounds it is totally focused on undergraduates. There is no comparable publicly funded scheme for postgraduate taught course, despite the fact that many would argue for the increasing importance of the latter in contributing to the higher level skills base required for economic competitiveness. However, it does seem that this issue is now attracting more widespread interest and I hope members of this audience will join in and seek to influence this debate.

Finally, let me comment on the issue of relationships between universities and business. The feeling in the past has been that we are great at research but not so great at subsequent translation into wealth. I think we are not too bad, but could doubtless do better. I think the addition of the TSB to the research/innovation ecosystem has been transformative and the recent development of the Catapults has been another major step forward. Here, and in the context of the research councils’ strategic partnerships, I think there has been considerable progress in working with large national and multinational companies. The two major areas of concern seem to me to be how to work better with SMEs, and how to grapple with issues of regional policy. We need a more focused debate around SMEs, starting with a clearer taxonomy; for example, high tech university spin-offs are in many ways very different from long established family firms; and positioning in a supply chain may be an even more significant differentiator. With regard to regional and local economies, universities are still working through the transition from the RDAs to the LEPs. Much more thinking is needed to which we all need to contribute, so let me end with a plug for a new kid on the block: the National Council for Universities and Business (NCUB), which is a successor to the previous Council for Industry and Higher Education (CIHE), and is charged, following Tim Wilson’s report a few years ago, with acting as a think tank and agent for change at this important interface.

Networking is one of the key modes of working of the NCUB, as it is for the ERA Foundation. I should therefore keep you no longer from this important post-lunch activity. Thank you again for inviting me today.