Enterprise and Lifelong Learning Committee, 25 Feb 2003

Meeting date: Tuesday, February 25, 2003

Official Report 216KB pdf

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Teaching and Research Funding

We move to item 3, which is our consideration of teaching and research funding in higher education. I welcome Roger McClure, the chief executive of the Scottish Higher Education Funding Council and the Scottish Further Education Funding Council, Professor Georgina Follett, whom I think we have seen at the committee before, and Professor David Gani, whom we have certainly seen before. Are you going to kick off, Roger?

Indeed.

Thank you for your very helpful paper. Perhaps you might like to supplement it with a few remarks.

Thank you for the opportunity to meet the committee this afternoon. As the committee recognises my colleagues, there is no need to introduce them apart from saying that Professor Follett is a member of the United Kingdom committee that is looking at the research assessment exercise. I know that the committee is interested in that exercise. Professor Gani, who has been with the funding council for just under a year, represents a very positive move by the council to establish a research policy and strategy directorate, which increases our capability to support the universities in respect of research policy and so forth. That is a very welcome development.

I have apologies from my chairman, Dr Chris Masters. Unfortunately, he is not able to attend the committee this afternoon. I also have apologies from Professor Geoffrey Boulton who, as the committee knows, is the chair of our research policy committee. Both of them would have liked to have attended the meeting today had they been able to do so.

I do not have anything to add to our submission. I understand that the committee's interest is primarily in science, the economy and knowledge transfer and in SHEFC's role in all of that. I know that on the last occasion that the funding council appeared before the committee before I arrived in Scotland, there was some discussion about teaching and research funding methodologies. I therefore thought that it would be useful in this introduction to reassure the committee that, when the allocations were made last year, its concerns were registered and responded to. I am sure that members know that the revised methods of allocation took account of nearly all the points that the committee made. I hope that that was indicated in our submission.

I will summarise the key points. The committee was concerned about price groups, prices and the treatment of fees-only students in respect of teaching funding. I confirm that movement has been made on all those matters. Similarly, the committee's comments on widening access and premiums for disabled students were implemented and allocations were made.

Few concerns have been raised by the sector. Indeed, we are pleased that early returns for the current year show that the sector is delivering about 1 per cent above the Scottish Executive's target for students in Scotland. At the moment, with Universities Scotland, we are progressing work on prices, price groups and so on in order to be satisfied that the basic relativities that are expressed in those broad groups are appropriate.

On the research side, a key development is the additional funding that the Scottish Executive made available after the results of the 2001 research assessment exercise were known. One can never be sure how these things happen, but the additional money, which the committee recommended, made a huge difference to settling the allocations for institutions in Scotland. It enabled us to make a 14 per cent increase in quality-related funding.

In making those allocations, we were able to include some of the 3-rated departments. I remember that that issue was of particular concern to the committee. Members were also concerned about the post-1992 institutions and whether their research contribution would suffer. If they have had a chance to examine the figures, members will see that that group received substantially the biggest increases—admittedly, from a fairly low base compared with research-intensive institutions.

The sector welcomed the research allocations and the various components of our research funding to which we refer in our submission. Those include picking up rising 3 departments, the foundation grant and the strategic research development grant that we have introduced. It is interesting that many of the components of the white paper on the future of higher education in England and Wales that was published recently are very similar to those that are already in place in Scotland. I take that as a form of endorsement.

One of the key points that I want to make about science, the economy and knowledge transfer was made earlier today. The essential roles of universities have been widened gradually over many years. Additional roles that universities would not naturally have thought of as being core territory include widening access, with its social justice implications. Now there is an emphasis on how universities can support and develop the economy. Sir Alan Langlands pointed out that that is not a core function of universities, but one that they are taking on.

The shift that I detect, even while I have been in post, is that universities and higher education institutions throughout Scotland are now ready to accept supporting the economy as a role and responsibility in which they are engaged fully. They do not regard it as an unwelcome role into which they are being pushed or as something that they are required to do in return for grants. There is a clear acceptance that supporting the economy is a responsibility of the system. I am sure that universities will respond extremely well in this area, as they have done in many other areas. They have been successful in increasing the quality of research, widening participation and so on. We must consider how well they do over the next two or three years.

Our submission makes three basic points about the funding council's role. First, we must have an excellent science base and it is a fundamental responsibility of the universities to provide that. Secondly, we need excellent teaching, because the export of appropriately qualified and skilled graduates into the economy is probably the biggest transfer of know-how that the university sector makes. Thirdly, we need to facilitate the process of knowledge transfer that the committee has explored. The funding council has a role in that process. Our knowledge transfer grant has been referred to. SHEFC is considering how, in forward planning its budgets, it can increase that grant, as the messages that we are receiving about it are very encouraging.

That is a very helpful introduction. It is good to know that many of the recommendations in the report on our inquiry into teaching and research have been implemented in whole or in part.

As the emphasis of today's meeting is on research and commercialisation, I will begin by asking about the relationship between, and respective roles of, the new science advisory committee and SHEFC's research policy committee. There is potential for considerable overlap and complementarity in what those two bodies are trying to achieve.

This is an evolving situation. We did not immediately agree how everything should work in the future. However, you are right to suggest that the two committees have complementary responsibilities. Professor Gani attends meetings of the science advisory committee. He is in close contact with Professor Sibbett and the work of the science advisory committee. In simple terms—as we said in our submission—we will await the committee's broad recommendations vis à vis science in Scotland, although we will take part in generating its output. We will then consider the role of SHEFC in developing those proposals. This is an evolving relationship, but because Professor Gani's role is focused on university research and its development it should not be difficult for the relationship to work well.

What role will the funding council have in relation to the ITIs?

Up to now, our role has been to ensure that the ITIs are set up in a way that enables them to work with the universities. Some of the criticisms of the RAE centre around the fact that such processes do not always take sufficient account of the way in which research is undertaken or the aspirations and incentives that drive researchers. In working with Scottish Enterprise, we were keen to ensure that, as the model and its way of working were developed, they fully took into account the aspirations and ways of working of the researchers on the ground. It was evident that if they were pulling in opposite directions, it would be much harder for the initiative to be successful.

It is fortunate that, as a result of the work of the joint task force, which was undertaken last year by the funding council and Scottish Enterprise, I now attend the board meetings of Scottish Enterprise and Robert Crawford comes to our meetings. In discussion with him on how the ITIs were developing, I organised a meeting to bring together university representatives, Janet Brown and others from Scottish Enterprise and people from the Executive's enterprise and lifelong learning department, and we now have a standing group that meets regularly. It is led by Andrew Hamnett, from the University of Strathclyde, along with other representatives, and works closely with Scottish Enterprise to ensure that the way in which the model evolves is sensible and reinforces the objectives instead of working against them.

Therefore, the funding council has had an important role in facilitating. We also have a financial role. In our forward funding, we have been allocated funds—similarly to the dual support arrangement—to mirror the funds that Scottish Enterprise is investing as if it were a research council. We have funds to invest in the research base to provide the infrastructure on which the additional work of the ITIs will be based.

I would like to ask Professor Follett about progress on the review of the research assessment exercise. When do you expect that review to be completed?

We will have one further meeting in March, after which a paper will be produced and go out to consultation. It is incredibly difficult to draw together all the different strands in research. It is no longer purely papers that are involved, but also practice-based work and work that has other types of output. We are currently developing—or proposing to put into the consultation—two models to be evaluated by the academic community and partners. Those models will go out to public consultation.

The discussions have been rigorous. The group includes representatives of industry, academia and other interests, including medicine and the humanities, so there is a broad grouping within that arena. I do not think that we have found the answer—it is a bit like a holy grail—but we have certainly moved some of the agendas forward.

I ask that our successor committee, after 1 May, be notified officially when the consultation exercise starts. It may want to submit a response in the light of the work that we have done on research and teaching.

I will make sure that it is.

I am interested in the part of your submission that covers the increase in student numbers for science and the related subjects of engineering, computing and mathematics. Has there been a sustained increase that will continue, or has there been a proportional increase in relation to what has happened in previous years? I refer to paragraph 7 of your submission.

I cannot give you exact comparative figures off the top of my head, but my impression is that science has been doing better than expected. It was interesting to hear the evidence of your earlier witnesses, which was a bit ahead of our submission in that it concerned applications. Application rates are not as important as getting enough good students. Whether there are 10 or four applicants per place does not matter. The figures in paragraph 7 show the number of students who are present in the institutions and, over the past few years, the figures for those subjects have been encouraging.

Does SHEFC intend as far as possible to maintain funding to meet that demand by institutions, if that demand is sustainable?

Yes. Our whole funding approach is to try to support student demand. I am sure that you are familiar with the fact that having gone through all the convulsions of the model, we come out with a block grant. The intention is that the institutions should recruit in response to demand, except in a few controlled areas such as medicine for which, because of the costs and so on, the numbers are capped.

I have a more general question, which is still related to where the applicant students come from. There has been some anecdotal evidence that there is a paucity of teaching of science subjects at secondary school. Is there any dialogue between SHEFC and the educational system—whether at Executive level or elsewhere—or is your dialogue directly with the institutions for which you are directly responsible?

I cannot give you a comprehensive answer on whether there has been any dialogue between SHEFC and the schools. I am personally not aware of any senior-level dialogue of that kind, but I would expect it to originate between the institutions and the schools. That would be the natural locus for that kind of discussion. As you know, the schools are in frequent annual contact with universities to discuss what they are looking for, the types of opportunities that are open to students and so on. Where we can support students emerging from schools is in the kind of information that we make available to them. The funding council has had a role in supporting initiatives to improve the information that is available to students when they are choosing their universities and courses.

I wish to follow up with a small supplementary on Annabel Goldie's line of questioning, which is important. What about the many bodies that you sit on and their liaison with Scottish Enterprise and many other organisations? Is any work going on with working groups or Government departments to examine specific questions? Annabel Goldie's point about the figures in paragraph 7 on student numbers is important, but we heard earlier about what is happening generally. I agree that that is anecdotal. That is what worries me, because it is not evidence based. Is any work going on at strategic levels to examine the deep-seated problems that Sir Alan Langlands described earlier regarding the lack of younger people who are doing science degrees and science disciplines?

I am not personally aware of such discussions. I can find out from colleagues whether that is happening. While we are on this line of discussion, it is worth making the point that there have been many examples recently of funding councils trying to correct demand-side shortfalls by creating extra places, but of course creating extra places does not itself stimulate demand.

If there is a demand issue, it is much more a question of trying to understand the market forces that are causing a shortfall in demand where one might have expected demand to come through. We engage in that kind of discussion. One recent example concerns the health department in Scotland. There have been recent reviews of the supply of doctors in Scotland and of people taking up professions allied to medicine, where there are clear shortages and we are asked occasionally to supply places. Depending on the circumstances, we try to respond if we can, but that does not address the fundamental problem, which is that people do not want to do some of the jobs as they are currently structured and rewarded.

I have two specific questions on the submission. The first is on one of the bullet points in paragraph 5, which states:

"£10 million per annum to institutions to strengthen capacity where it is lacking in selected priority economic and other areas".

As with previous points that you made, who makes that assessment?

We have a process in the council. We have a committee to advise on which proposals to support. We often work with Government departments and look to co-fund in particular areas. To give a specific example, one of the first projects of that kind was in health and we have just done another one in education, which considered how better teaching practice could be developed in schools.

The strategic research development grant is taking on a new form and replaces an earlier type of grant. We recently published information on the different streams of funding that will fall under the grant, how we will target the money, which people we expect to apply and the people for whom we expect the funding to be top down. We have tried to construct a scheme that gives us flexibility in responding to gaps and deficiencies that we see in the research base.

Given that we are discussing science and knowledge transfer, are gaps and deficiencies in those areas coming through in the initial stages of operation of the fund? Will the fund be particularly focused on those areas?

There is no doubt that many of the bids that we receive relate to science projects and that we consider those bids. However, other areas are involved and we must strike a balance. The second paragraph of our submission makes the point that we should not think that supporting science is the only way in which the economy will develop because other areas, such as the creative arts, also have an important role. We try to balance our support for projects.

I was encouraged by your assessment of the impact of the changes to your price structure that were made last year—perhaps the worst fears of the new universities were not realised. Are you aware of any adverse or untoward effects of the changes?

That is an interesting question. If your question is whether we have had representations from institutions, the answer is yes, but whether I judge that to be an adverse effect of the funding system is another matter. When we consider the system from an overall perspective, we do not think that it is deeply flawed and we have had virtually no responses from the sector to indicate that. However, occasionally, people argue that a particular discipline is underfunded; for example, modern languages have been in the headlines for that recently.

In Scotland, we have 13 or 14 price groups—depending on how one counts them—but in England there are only four. In our situation, there is an averaging of costs. As there is a range of subjects in each group, it is inevitable that, when a mid-point funding level is fixed, people involved in some subjects in the group feel that they are underfunded and others feel that they are slightly overfunded, although they will not admit it. However, because most universities are multi-faculty institutions, the usual swings and roundabouts come into play. The system is perfectly satisfactory and allows us to strike a balance; it gives institutions flexibility and ensures that our funding is not too detailed or prescriptive.

The people from whom we hear always think that their subject is underfunded—no one says that their subject receives more than the average—and tend to have bypassed the head of their institution. Once we have issued a block grant, it is for the senior management and the court of the university or higher education college to decide how to distribute the funding among its departments. That is a detailed matter and must be left up to the institution to decide internally because we can have no sensible understanding of the organisation and cost structures in different departments. Now and again, people say that their subject is underfunded but, at least in part, that reflects the decisions that the institution has taken.

Your submission highlights many points on which you support science, but, overall, are you increasing the share of funding for science in relation to the funding for other subjects across the spectrum? I cannot tell that from your submission.

If you want a precise answer, I will have to check back through documents.

I am asking for a broad view.

Science still has the dominant proportion of expenditure, but the figure depends on how science is defined. For example, paragraph 7 of our submission says that the figure is 40 per cent, but that includes funding for subjects such as engineering and computing. If medicine and some social sciences are included in the definition, it could easily be said that 75 per cent of teaching funding was allocated to science disciplines or disciplines that are closely related to science. The proportion for research funding is about the same.

Not all fluctuations in student intake or graduate output are directly related to your decisions, but do you collect evidence on the effect of funding decisions on student numbers in some subjects, or do you use other evidential bases for assessing the impact of funding changes?

We monitor the number of students who are recruited in each area. Each year, institutions have the opportunity to seek to make adjustments between the price groups. I said that institutions have much less flexibility in a few subject areas and that they are expected to operate within the funding group, because of its special nature. Medicine is the obvious example of that, and parts of education are other such areas.

Except in the controlled areas, we give institutions the flexibility to transfer numbers between groups before each funding round, so that the numbers reflect as closely as possible what is happening on the ground and student demand. As I said, it is not sensible to insist on recruiting in an area for which there is no demand. That becomes a diversion of resources away from something for which there is demand.

Some witnesses have welcomed the knowledge transfer fund. Universities have difficulty in deciding the criteria to use to fund opportunities that will be commercially successful versus those that are just for the public good. Do you use a set of criteria for supporting funding? For example, the knowledge transfer fund appears to be a success. Do you have criteria for rewarding and increasing that?

Allocation relates to a formula and we have a basis on which we make distributions to institutions. We give institutions much flexibility—which has been welcomed, as you heard—about what funding can be used for in the broad area of knowledge transfer. Again, we try not to be prescriptive. We follow up matters and receive reports from each institution on what they use the funding for.

As has been said, we are working with others to develop metrics for knowledge transfer. When we establish good, reliable metrics, I am sure that we will want to use them to improve our formula for allocating the knowledge transfer grant. As I have said, we plan a substantial increase as soon as the budget allows that. We see that coming on stream not next year, but in the second and third years of our triennium.

My colleagues have covered most of the ground. I am particularly interested in the comment in your submission that

"It is important to emphasise that the single most important route for the transfer of ideas and know-how from higher education to the economy comes through the employment of graduates."

We know that there has been leakage of graduates from the Scottish economy through the years. It is vital for our growth prospects that we retain a far higher proportion of our graduates. Do you monitor that situation? Can you say whether the proportion of graduates from Scottish universities who are employed in the Scottish economy is increasing or reducing?

We are becoming more interested in such figures, but they are extremely difficult to obtain. A first-destination survey is undertaken six months after graduation. That does not provide brilliant data, and data about what has happened to graduates of Scottish universities are poor after that.

That is certainly an area of increasing interest. As I said, we are likely to make progress in fields such as health, in which a specific issue has arisen and the health department is now looking at its work-force planning in the medium to long term. The health department knows that Scotland trains far more doctors than it needs, but that it is still short of doctors. We are in discussion with the department and with our parent department on what responses are available to us to do something about that. Sir Kenneth Calman, the vice-chancellor at Durham, is leading an inquiry on that at the moment. I have met him and we have discussed the matter, and we will have a further meeting before the summer.

Clearly, those are the outcomes that we want to drive towards, and the impact of your decisions should be measured against them.

That is difficult territory, because, under European legislation, people from other nations cannot be discriminated against. One method of retaining people in Scotland might be to try to get more home-grown Scots into specific courses. Something would have to be done at the recruitment stage, which is where you run into difficulties about what actions are available to encourage more home-grown Scots. The committee will be well aware of the recruitment issues that have been aired in the press recently in relation to how candidates are chosen.

I read in one of this morning's newspapers that the First Minister is making an announcement today on his population measures, which will include some ways of retaining more graduates in Scotland. I do not know the details, but no doubt we will find out later.

I would be interested to hear how he is going to do it.

You have obviously not been consulted, then, Roger.

Thank you for your helpful evidence.