Teaching and Research Funding (Scottish Higher Education Funding Council Review)
Good morning. The first item of business is an Enterprise and Lifelong Learning Committee debate on motion S1M-2380, in the name of Alex Neil, on the committee's inquiry into the Scottish Higher Education Funding Council reviews of teaching and research funding. I ask members who wish to contribute to the debate to press their request-to-speak buttons now. I call Alex Neil to speak to and move the motion on behalf of the Enterprise and Lifelong Learning Committee.
I begin by saying thank you to all those who participated in the preparation of the Enterprise and Lifelong Learning Committee's report. My thanks go first to Simon Watkins and the committee's clerking team, who have done their usual excellent job. I thank the Scottish Parliament information centre for its support, and I thank all those who gave evidence to the committee during its inquiry. My special thanks go to Professor Sir John Arbuthnott, who acted as adviser to the committee in the preparation of its report and worked with the committee throughout the summer, as the report progressed through various drafts. I welcome him to the VIP gallery this morning.
I also thank the Minister for Enterprise and Lifelong Learning for her co-operation in responding to the report within such a short time frame. Normally the time frame for responding to reports is about eight weeks. This report was published about 10 days ago and we expect a fairly detailed response from the minister later in the debate.
I thank SHEFC for its co-operation. We have criticised aspects of SHEFC's work, particularly in relation to teaching funding, but we recognise that it had a difficult job and that it made an effort to bring the teaching funding system up to date, even though we believe that that needs further thought.
I have been quite astounded by the reception that has been given to the report in the 10 days or so since it was published. I will offer members a selection of quotes. The first is from Professor Sir Bernard King, the principal of the University of Abertay Dundee, whom I also welcome to the gallery this morning. The day after the report was published, he wrote in The Scotsman:
"The enterprise and lifelong learning committee's report into SHEFC's recent funding reviews is to be warmly welcomed on many grounds, not least for its clear and far-sighted view of how university teaching and research should integrate with the wider economic, cultural and social life of the nation."
I will quote also from an e-mail that I received from Gordon Millan, chair of the University Council of Modern Languages. He congratulated the committee on the profound way
"in which you ‘handled' your Enquiry".
He said that he was
"delighted that our message on modern languages was listened to",
and that all the evidence that was given by the UCML was incorporated into the committee's report.
My final quote is from a letter that I received from Universities Scotland, which states:
"Universities Scotland warmly welcomes the Committee's report, and congratulates the Committee on the thoroughness of its analysis. It believes that the main findings are sound, and that the principal recommendations form a good basis for addressing a number of vital issues in connection with the funding of both teaching and research."
However, the report has not been welcomed universally. At a meeting yesterday of the senate of the University of Strathclyde, a comment was made about "Alex Neil's committee rampaging" through the universities of Scotland. First, our purpose is not to rampage. Secondly, I do not think that other members of the Enterprise and Lifelong Learning Committee would be happy with its being described as "Alex Neil's committee". Thirdly, the kind of stuffy attitude that the comment that I quoted reflects is for the days before devolution, when there was practically no scrutiny of these matters. The purpose, remit and responsibility of the Parliament is to bring the funding of public bodies under proper scrutiny and to ensure that taxpayers are getting a fair return on their investment in higher education.
The debates that have taken place since the publication of the report have tended to focus on teaching funding, rather than on research funding. I want to rebalance the debate by highlighting the key issues that relate to research funding. I remind members that in Scotland's universities about £370 million a year is spent on basic and applied research. Roughly one third of the funding for that comes through the Scottish Higher Education Funding Council. Research is absolutely vital to both the economic and the social and cultural life of Scotland.
Scotland has an excellent record in academic and scientific research. I could quote examples from many universities in Scotland: the work that is being done on cancer at the University of Dundee; the work that is being done at the University of Abertay Dundee; the work that is being done on lasers at Heriot-Watt University; and work that is being done at the University of St Andrews and other universities. However, traditionally we have been poor at translating research into commercial opportunities that can be of wider benefit to the Scottish economy. In this inquiry the committee—its remit is enterprise and lifelong learning—was naturally very interested in how we can improve commercialisation of Scotland's research for the benefit of the nation as a whole. This is the country that produced the telephone and the television, only for those products to be produced, by and large, furth of Scotland, with minimal direct economic benefit to Scotland.
Our report makes three fundamental points. First, we say that the current formula that is used to determine research funding requires to be refined and improved to make it more relevant to the need for the development of research into downstream economic activity. Although over the past 10 years the research assessment exercise has improved markedly, it still has some way to go toward serving the nation's needs. When an academic has a paper published in a prestigious magazine, he or she is given a substantial number of brownie points in the research assessment exercise. Somebody who patents a new product is given substantially fewer points in the research assessment exercise and somebody who sets up a spin-off company that is of benefit to the wider community by creating jobs gets no points at all. We need to change that, so that somebody who sets up a spin-off company is regarded as a national hero, rather than as somebody who is undeserving of reward. The irony of that situation, which was pointed out by a number of witnesses in the inquiry, is that the publication of papers in prestigious journals sometimes results in people in other countries taking out patents for the products of which we have revealed the secrets in those papers. That is an absurd position that needs to be rectified.
The second major point that the committee made about the research assessment exercise concerned the recommendation by SHEFC—which the committee rejects totally—that funding for level 3-rated departments should not be included in research assessment exercise funding. If that recommendation were implemented, it would have a number of detrimental effects. First, it would be particularly detrimental to our new universities. Secondly, much level-3 rated research will become the level 4 and level 5-rated research of tomorrow. If we cut off funding to the seedcorn research, which is often level 3-rated research, we will not be able to enhance our excellence in future years.
We also found in evidence that level 3-rated departments are often the most innovative in terms of subject areas. Examples of that are in music and—if I may refer again to the University of Abertay Dundee, given that Bernard King is in the gallery—games technology. Abertay started from virtually nothing and people laughed at the idea of a university undertaking games technology as a serious subject. Now, however, Abertay is a world-renowned centre of excellence in games technology, which is one of the fastest-growing industries in the global economy.
Technology Ventures Scotland, which was set up to promote commercialisation in Scotland, told the committee that
"three star research departments are currently better aligned to the needs of business",
particularly to small and medium-sized enterprises. The committee's members therefore believe—unanimously, I think—that funding for such departments should be included in the research assessment exercise funding.
That presents a problem, however. Our excellence is growing at an almost exponential pace while the available funding is growing at an arithmetic pace. I am not criticising the Executive—as the committee convener, I would never do that—but there is a fundamental policy issue that needs to be addressed. If we are fully to realise our potential and ensure that the nursing of research at levels 3 and above on the research assessment exercise scale is properly funded, in order to ensure that those ratings are improved, there will have to be substantial new funding from the private and public sectors in the years ahead.
The three key issues that the committee identified in relation to the research assessment exercise are: the need to fund level 3 research; the need to ensure that spin-offs and patents are rewarded at least to the same extent as academic papers; and the need to ensure that the seedcorn funding exists to provide for the excellence of tomorrow.
On research, the committee addressed the scale of funding. I believe that the committee and the minister agree that there must be exponential growth in funding for research. If I were asked to summarise what the national economic development strategy for Scotland should be in the 21st century, I would say that we should make ourselves the scientific research capital of Europe. That is the area in which we have outstanding ability and can compete on a more than equal footing, and from where we will generate the wealth of tomorrow. In order to do that, we need the private and public sectors to invest significantly more in long-term research in our universities and in our industrial base. Often, the debate concerns only public funding; however, my message to the private sector is that it, too, has failed. The percentage of funding that is spent in the private sector in Scotland on research and development is about one third of the European average for the private sector. One company in Finland—Nokia—spends more on research and development than does the whole of Scotland. That is not a healthy situation for us and we need to address it seriously.
Does Alex Neil agree that it is unacceptable that all the tens of millions of pounds that are spent on research by a company such as BP are spent south of the border, because our universities cannot get the seedcorn funding that they need to build up a track record that will attract private sector research and development?
There are two issues. One is about attracting companies of the calibre of BP to do more research in Scotland and the other—which we cannot dodge—is about the poor record of our indigenous companies in research and development. If our key strategy is to build up indigenous research, we need to get those companies to spend three or four times as much as they spend now on research and development.
The committee's recommendations concentrate on the need for additional investment, the need for more money for patenting—we are losing a significant number of commercial opportunities through lack of funding in that regard—and the need to improve the commercialisation process between business and universities and within the university sector.
An example of the best model for the future is the Institute for System Level Integration in Livingston, which brings together business and academia and exploits research to full commercial advantage. Scottish Enterprise and other organisations are planning the establishment of another three such institutes and the committee is wholly supportive of those plans.
Another key recommendation is that the science strategy should be fully developed into a research and development strategy that brings together science, technology, research and development and the commercialisation of that scientific work.
Substantial amounts of public money are also involved in teaching funding. We should send a memorandum to the University of Strathclyde's senate to remind it of that fact. Some 60 per cent of all university funding comes from taxpayers, who are therefore entitled to examine how that money is being spent. Rightly, £440 million a year of public money is spent on the higher education sector in Scotland. I remind members that we are talking not only about the 14 universities, but about the future of the other institutes of higher education, such as the art colleges.
The committee decided to hold the inquiry because of members' concerns about the SHEFC proposals. We are concerned about the reduction in the number of subject areas from 22 to six. We are also concerned about the changes to subject funding that led to an 8.3 per cent increase in funding for clinical and veterinary subjects and an average 1 per cent reduction in funding for all other subjects. What impact will that have on the new universities, the art colleges and on particular subject areas, such as modern languages?
We urge SHEFC to go ahead with the important measures to widen access for people from lower income families and to help disabled students and part-time students more.
We were also concerned about the process that was employed by SHEFC as it went about the review of teaching funding. It seemed to get off to a good start, but it went downhill from there. It brought in consultants then, in effect, sacked them. It set out to try to obtain evidence to justify the future funding formula: it then abandoned that effort. No assessment was made of the impact of the proposals on individual institutions. There was a lack of clear guidelines on implementation. There was no proper justification for the favourable treatment of the medical subjects or the perceived adverse effects on other subjects.
Our main conclusion was that SHEFC mishandled the review of teaching funding. We acknowledge the difficulties that were involved and the fact that SHEFC set itself an ambitious target—it is right that we encourage quangos to do that. Unfortunately, the review was mishandled to the extent that SHEFC's credibility was damaged.
That is why the committee believes that the way forward is to set up an independent inquiry to consider the long-term funding formula for teaching in our higher education institutions. The inquiry will carry no baggage and will base its evidence on the facts; it will examine the proposals of Universities Scotland and SHEFC and the wider picture of what the people of Scotland need from teaching in our universities. The inquiry will not be a cosy arrangement between SHEFC and the teaching institutions.
The report makes a number of recommendations on the inquiry and suggests that in the meantime there is no reason for delay on the consensually accepted aspects of SHEFC's proposals on helping the socially excluded, the disabled and part-time students. We should proceed with implementing those proposals.
All in all, we believe that the committee has come up with a fair assessment of the problem and a reasonable set of recommendations. We hope that the minister will agree with the bulk of the recommendations when she makes her statement later in the debate. Scotland's university sector and its other higher education institutions are essential elements of our national life. They are essential not only to the economic life of the nation, but to its social life and cultural development. The simple objective of the committee, the minister and the Parliament is to ensure that we have one of the best higher education sectors, not only in the United Kingdom or Europe, but in the world. If the committee's recommendations are implemented—on top of what the minister has announced—we will travel a long distance toward achieving that objective.
I move,
That the Parliament welcomes the 12th Report 2001 of the Enterprise and Lifelong Learning Committee on the inquiry into the Scottish Higher Education Funding Council reviews of teaching and research funding (SP Paper 423).
I thank the convener of the Enterprise and Lifelong Learning Committee for his speech on behalf of the committee. He covered many points that are pertinent to the report. The committee's members believe that the debate and the minister's response are immensely significant not only for the higher education sector but, as Alex Neil said, for the economic, cultural and social well-being of Scottish society. It has long been recognised that Scotland's economic prosperity requires a highly skilled and motivated work force; we believe that the higher education institutions, further education colleges and private sector training providers have a fundamental role in that agenda.
The committee's decision to interrupt its programme of work to conduct the inquiry came about because of the considerable concerns that were expressed by higher education institutions and other agencies over SHEFC's proposed changes. I will concentrate on the "Teaching Funding" section of the report. Other members of the committee will cover in depth the research element.
The committee agreed with SHEFC that a review of teaching funding was required and none of the committee members or the stakeholders who were involved disagreed with that. The system that was in place resulted from the history of the sector and was overdue for a change. There was considerable support in the sector for a system that would simplify structures and make them more transparent. One big issue that was raised time and again was the transparency of what happened in the teaching debate.
In its evidence, SHEFC informed the committee that the review of higher education funding was a response to the changing landscape and included issues such as the funding model—which, as I said, had not changed for 10 years, despite massive changes in the sector—the rapid expansion of the sector during the early 1990s, the marked slow-down in 1997 and the changes in the institutional landscape. The Government's agenda is firmly and rightly aimed at widening access for under-represented groups of learners. The committee is concerned about matters such as the lack of women in technology training and we are pleased to see initiatives by the Executive to try to redress the balance. We feel that that is something that should be at the heart of any funding model.
The main thrust of SHEFC's proposals included the reduction in the number of subject groups from 22 to six. Clinical and veterinary subjects would benefit by an 8.3 per cent rise in funding. Other subjects would receive an average 1 per cent reduction in funding. Incorporation of fees-only students within the funding envelope became a highly debated issue.
An additional 5 per cent was to be provided to help widen access, which the committee accepted. Additional funding was allocated for disabled students and the allocation of a 10 per cent cost supplement for part-time students was to be continued.
Some of the proposals, particularly the teaching allocation, caused disquiet within the sector. We must understand that, for universities, the teaching grant is the single most important element of their funding. As the convener of the Enterprise and Lifelong Learning Committee said, £440 million of public money goes into the sector.
The higher education sector welcomed a reduction in the number of subject areas because that would simplify the system, improve transparency and take account of today's education system. However, the lack of an evidence base for the proposed reduction, and the proposed structure of the subject groups have caused great concern. The Scottish Higher Education Funding Council made much of the principle that the review would be evidence based, but that was where things started to go wrong. The parts of the review that were carried out prior to the part that we are considering had been carried out well and the sector was on board. However, SHEFC lost the confidence of the sector at that point.
In the later stages of the review, SHEFC abandoned the evidence-based approach for what seemed to be a mathematical exercise, averaging out existing funding levels in a way that seemed to have no basis. Neither the committee nor the sector could understand where and how SHEFC arrived at the group of six subject areas.
The committee concurred that SHEFC had mishandled the teaching review and, more important, that it had underestimated the difficulties of developing an evidence base. The committee realised the difficulties of that, but SHEFC set that expectation, so it should have carried it through; the sector expected that. Additionally, SHEFC underestimated the sector's reaction to its course of action.
The committee concluded that the lack of a system to establish the cost of teaching is a fundamental issue for higher education, however difficult it is to find a formula. The long-term solution is to find a proper pricing system for higher education in Scotland.
The committee agrees with the higher education sector that SHEFC's proposals do not represent a comprehensive analysis of the costs that are involved. The effect of the proposed changes would be the allocation of significantly more resources to clinical and medical subjects and the introduction of a weighted averaging system that could not be substantiated or justified. The Scottish Higher Education Funding Council provided no evidence to back its proposals.
The Scottish Higher Education Funding Council has acknowledged the impact that the proposals would have on small specialist colleges—the arts colleges will welcome that, however belated it might be. However, to date, SHEFC has not recognised the funding difficulties that the review would mean for courses such as technology, languages and the arts. Committee members have received correspondence from people who are delivering intensive courses in narrow subject areas to small tutorial groups, such as in technology. Time and again, the committee has heard evidence about the need to increase the number of engineers and the technology base in the student population. The Scottish Higher Education Funding Council's proposals could harm the economic success of that sector, so we want it to consider subject areas such as technology, languages and the arts.
The committee has made some recommendations. First, the funding council should go back to the drawing board on the resourcing of teaching. However, the committee also recommends that, in the short term and where there is general agreement, positive aspects of the proposals should be developed. We want to allow those issues that are important to the sector to be progressed.
The committee has no intention of inhibiting progress, and the positive aspects of the inquiry, such as proposed additional support for widening access for students with disabilities and part-time students—which have universal support—must go ahead. We are aware that SHEFC has met Universities Scotland and that discussions continue. The committee would have no problem with improvements that could be implemented immediately or with advances being made.
Although the committee accepts that situation for the short term, it recommends that the Minister for Enterprise and Lifelong Learning establish an independent review body to examine the costs of teaching. For the long-term success and sustainability of the sector, we need a review of the medium and long-term costs of teaching. If the minister agrees with the committee's findings, I hope that the review will have a far-reaching remit, that it will be transparent and that it will provide a funding system that is fit for the 21st century. It should celebrate diversity and equality and embrace access as its driving principle.
I will talk briefly about research, because my time is limited. It is fundamental that level 3 funding is provided via the RAE. That was the committee's wish. As Alex Neil said, we must fund level 3-rated departments. Spin-offs from such departments must be rewarded. We must develop seedcorn funding for excellence for future generations. No one wants to inhibit progress or wants levels 4 and 5 departments to have their funding stopped or to be discriminated against, but all committee members felt that funding for level 3 departments was important to Scotland's future economic development.
The debate is the beginning of the process of modernising Scotland's lifelong learning provision. The committee's lifelong learning inquiry is focusing on the wider strategic issues that impact on the sector and will cover the resourcing of higher education teaching and research. The committee looks forward to reporting its findings to the Parliament in spring next year.
Kenny MacAskill will open for the Scottish National Party. He has 12 minutes.
I agree with everything that Alex Neil and Marilyn Livingstone said and I adopt their position. The report was produced by a cross-party committee. By definition, all parties were represented by committee members, who included me and my colleague Duncan Hamilton. We accept the motion and the report that is its basis. Accordingly, my comments will not follow a party line, because the SNP supports the motion and the report. Therefore, I may not take up all my allocated time, but allow SNP members and others who have a constituency interest or who wish to raise other matters to speak.
The situation is a bit of a guddle. The report is to be commended, but some aspects of it have been dated by actions that SHEFC has taken. Nevertheless, we must take cognisance of aspects that emanate from the report and follow its recommendations. A difficulty could be that too many reports exist. There is no clarity or strategy. The sector needs stability and strategic direction. As well as taking on board the report and its recommendations, we could argue for the Cubie committee to be reconvened and have its remit extended into higher education funding, then tell Andrew Cubie to get on with it. However, matters may have passed that point.
Like others, I will give SHEFC some brickbats, but it would be remiss of me not to say that I have some sympathy for SHEFC for two reasons. First, if an organisation's remit is unclear and its instructors do not set parameters, that organisation may go off at a tangent, in a direction that is unacceptable to those who chose the remit and everyone else. SHEFC needed clear directions and a clear remit but did not have them. The second and fundamental point is that if the cake is too small, there will be hunger no matter how it is divided. The higher education funding cake is too small. No matter how we divide it, someone will squeal that their piece is inadequate, not because they overeat, but because the available amount is insufficient.
It is fair to say that SHEFC handled the matter in a cack-handed way. Given the nature of the beast, there should have been more transparency and SHEFC should have consulted Universities Scotland and individual universities more. It should have realised that to say that its proposal was part of a discussion document was insufficient. The fact is that SHEFC sent hares running. I think that every member in the chamber received e-mails, mail or other communications from academics who were worried that their departments would go belly up. That caused instability in faculties and I do not doubt that it worried those who were considering applying to study in some faculties or universities. That situation should have been expected. As lawyers would say, SHEFC knew or ought to have known that the way in which it presented the report would send hares running and that worry would follow.
As I said, aspects of the report have been superseded. We must consider whether we want to go back to the drawing board on those aspects. The report recommends the establishment of a review body into SHEFC. Those comments have been affected by SHEFC's subsequent actions. A UK-wide transparency review is being conducted. The committee's report suggests that a review body should be established, but the Parliament should not reinvent the wheel. If the best knowledge and the great and the good are in SHEFC, reviewing how that body operates internally in Scotland and how it interacts with other bodies in the UK, rather than establishing another tier of bureaucracy and setting us off at a tangent, might be the best way of reaching the best solution.
Comments have been made about research funding, RAE and level 3 particularly. I subscribe fully to Marilyn Livingstone's and Alex Neil's comments. We must accept that SHEFC intends to pursue excellence. That is a laudable aim that is fundamental not only for the benefit of academic institutions per se, but for our nation's economy. There is great danger in allowing SHEFC to end funding for level 3 departments when that is not happening south of the border. That would cause considerable difficulties for new universities. As Alex Neil said, the great danger for new universities is that ending level 3 would ossify the situation and that we would be caught in a time warp. Those who sought to get up to speed but were late off the starting blocks because of the period in which they started would have difficulty reaching levels 4 and 5. Many universities would be caught by that situation, be unable to progress and have to remain as teaching universities.
Scotland should not work against those who seek to improve themselves, whether they are individuals, universities or their faculties. As Alex Neil correctly said, that situation would have affected not only new universities, but ancient universities with departments that wished to move up a gear and reach a higher level. We must take that on board.
The critical point in the report relates to research funding. The report makes points about the requirement to consider how we provide funding and the level at which we provide it. I agree with the committee convener's remarks about how to progress.
I am extremely grateful that the minister has been converted into a Finnophile. I have been mocked in the chamber—by Mr Mundell particularly—for my support for Finland as a country that Scotland should aspire to follow. I make no apologies for saying that. There are aspects of Finland that are laudable. Finland has resolved its economy and its health service and, as I have also pointed out, has managed to turn around the fortunes of its national football team. Over the past few years, in each of those three aspects, Finland has outdone Scotland considerably. I am grateful that the minister now subscribes to that theory.
The minister should also take on board the levels of teaching and research funding that nations, in particular Finland, provide. The Organisation for Economic Co-operation and Development funding figures show that, in 1993, Finland contributed 2.17 per cent of its gross domestic product to research and development. The United Kingdom lagged behind at 2.12 per cent. In 1998, by which time the white-hot hope had landed at No 10, Finland had increased its level of expenditure of GDP on research and development to 2.9 per cent. The UK's, by contrast, had declined and decreased to a miserly 1.83 per cent of GDP. I put the blame just as much on Westminster as on the minister and her colleagues.
That brings me back to the point that I made earlier: if the cake is too small, no matter how it is divided we will not be able to progress. If we wish to emulate Finland, and that would be an admirable idea for Scotland, we have to recognise, as other speakers did, the hard choices that have to be made. A small nation does not have the economies of scale that come with the critical mass of larger ones, whether they be our southern cousins or elsewhere. Small nations have to make a conscious effort to recognise that, to a greater extent, because they do not have the same ability to generate funding as do the larger countries, they have to front-load research and development. As we look at where we are going in the 21st century, we need to recognise the importance of research and development.
One important aspect of commercialisation is the benefit that it brings to ensuring that ideas that are springing forth and spewing out of our universities are generated economically. Part of the issue has to be addressed culturally, but we have to ensure that entrepreneurs who have business acumen and an idea but who do not have the scientific or technical knowledge are able to access the universities. One of the spin-offs of growing commercialisation would be for Scottish universities to move towards that goal.
We need to create a conduit between commercialisation and the ideas that emanate out of the universities with a scientific and technical base. At the same time, we have to allow our entrepreneurs and business community access to the universities. It is a two-way process. It is not about allowing universities to become more commercial—although they should—it is about allowing entrepreneurs who do not have the benefits that university faculties have, or the equipment that goes with that, access to the universities. The process is one of mutual co-operation.
The SNP commends the Enterprise and Lifelong Learning Committee report. As I said earlier, some aspects of it have been superseded, but I hope that it acts as a base for the Executive to progress matters. I hope that the minister will take from the debate some of the same matters that she has taken from her trip to Finland. That would see us push our research and development funding towards the level that is taken as a norm in Helsinki.
Kenny MacAskill will be pleased to hear that I intend to make a fleeting reference to Finland in my contribution to the debate.
For once, I am disappointed in the minister and her commitment to research and development. Last week, when she came to Dumfries to deliver the inaugural Crichton Foundation lecture at the Crichton campus—I assured the campus that I would mention it in my contribution—she told us that, while in Finland with the First Minister on a visit to the Nokia facility, she came across a remarkable innovation that would be the pride of any research department of a university in Scotland. The innovation was a dress that had in-built telephones and which converted itself into a desk and keyboard. I was under the impression that the minister had given an assurance that she would wear such a dress to the chamber. To date, she has not done so, but we live in expectation.
We live in a time of miracles. This morning, we even had a contribution to the debate from the SNP. Those of us who served on the Enterprise and Lifelong Learning Committee while the report was being formulated have not always been familiar with such an occurrence. I would have preferred Kenny MacAskill to have made his contribution during the course of the formulation of the report.
The convener of the Enterprise and Lifelong Learning Committee, whom I exclude from those remarks, referred to Professor Bernard King. The professor indicated that the committee's report was indeed proof of miracles. I would not go quite as far as that, but there is no doubt that the report has made an important contribution to the funding of further and higher education in Scotland. That is a subject to which the committee must return in its current lifelong learning inquiry. The inquiry is an enormous piece of work and I am sure that we will have the same support from the clerks and clear guidance from the convener that we enjoyed during the preparation of the report we are debating today.
I joined the Enterprise and Lifelong Learning Committee after it had begun the inquiry into research funding. As has been alluded to, the inquiry began as a result of the substantial concerns that were expressed by higher education institutions and others regarding SHEFC's proposed changes in relative allocations, which was intended as a consultation exercise. As became clear during the committee's inquiry, considerable support existed in the sector for a reduction in the number of subject areas and for other measures that would simplify the system and make it more transparent. However, SHEFC lacked an evidence base to back up the proposed reduction in the number of subject areas, from 22 down to six.
As the convener of the Enterprise and Lifelong Learning Committee pointed out in the committee press release when the report was launched, SHEFC underestimated the difficulty of developing an evidence base to underpin its new formula. What was worse was that SHEFC failed completely to appreciate that any major change in the funding allocation must be founded upon a strong evidence base. As the committee pointed out, at the very least, evidence should have been the starting point for SHEFC's review. It should also have been discussed openly.
SHEFC responded somewhat defensively to the initial criticisms. However, as our inquiry progressed, it was clear that SHEFC was able to enter a dialogue with Universities Scotland. I was pleased to receive a copy of the letter in which Professor Graeme Davies, convener of the Universities Scotland policy funding group, said that there had been a renewed and productive dialogue between SHEFC and Universities Scotland. Professor Davies also highlighted the real importance of the issue when he wrote:
"There is relatively little I want to add about the review of research funding other than to reiterate the importance of increasing the resource available to support research activity within the Higher Education sector since this activity is so critical to Scotland's international competitiveness and its future economic success. It represents a crucial and high return investment and we should be thinking less about mechanisms and formula for dividing up the cake and more about how we can increase the size of the cake so that our country can prosper."
My colleagues will return to that point during the course of the debate. While it is important to review the conclusions of the report—I will come to those in a moment—we must also discuss how to grow the funds that are available to universities in Scotland for research and, in particular, how to open the door for private funding, which evidence-taking sessions suggest is out there, and from which international institutions have benefited.
I turn to the substantive recommendations in the report. It is clear that the committee believes that SHEFC profoundly mishandled the teaching review and that it should go back to the drawing board. I look forward to hearing what the minister has to say on the specifics of the recommendations. Without going through each of them as other members have done, I would like to pick up on one or two.
Members have already highlighted SHEFC's proposal to exclude level 3-rated departments from receipt of RAE funds. Anyone who attended SPIKE, the cross-party group in the Scottish Parliament on information, knowledge and enlightenment, when Chris van der Kuyl of VIS Entertainments spoke about the future of the games industry—Dr Richard Simpson was one—would understand the enormous contribution that the games industry has made. That industry is not a traditional industry and many of us know little of the detail of it. However—if we can move our children from their PlayStations—we sometimes get to share in the output, and we understand the incredible importance and growth of that industry. The University of Abertay Dundee is to be congratulated on the work that it has done to develop the games industry. The approach that SHEFC adopted initially would have been detrimental to such work.
The other recommendation that I highlight is the need for business and academia to work more closely. We took quite a bit of evidence on that, and it was clear that the existing mechanisms for funding research in higher education do not necessarily reinforce the links between academia and industry. Those ties need to be strengthened if we want Scotland to become a true competitor in the global market. It has become evident, for example, that patents and commercial spin-outs are not always as highly valued as papers published in academic journals. As Des McNulty, among others, was keen to point out, both have their place, but that culture must be altered if we are to reap the benefits of the most recent findings of academics.
In evidence to the committee, we were told:
"Without question, academic staff members who are good at conducting first-class research in science and engineering are also the people who are most likely to create technologies with a commercial future and to be interested in participating in the commercialisation of those technologies."—[Official Report, Enterprise and Lifelong Learning Committee, 8 May 2001; c 1777.]
It was clear from the evidence that, over the past 10 years, university staff have become much more aware of the commercial value of their research and have formed good and valuable ideas.
However, ideas on their own are not enough. Greater parity is needed between an academic approach and that of industry. Industry is constantly open to using the latest research findings to move its technology forward, and we must find the mechanisms that enable us to do that. That may require universities and other institutions to examine some of their internal structures to determine whether they militate against effective commercialisation of research. Evidence we heard on the length of time it takes to get a response from university courts in relation to a proposal made the Scottish Executive look good in its turnaround time for correspondence. There has to be a better way for academics to consider proposals from business—Professor Beaumont highlighted that in his evidence. It is not just an issue of funding; cultural change must come about in the institutions themselves.
On an international scale, it is possible that Scottish universities can lead the way in international marketing and development of their ideas abroad. However, another important point that emerged from the evidence was that there must be closer co-operation and collaboration between universities. We have all seen examples of less than co-operative attitudes between institutions. That must change. One of the major, globally significant projects that was used as an example of what can be achieved with collaboration was the human genome project.
I am pleased that SHEFC, in its response to the report, welcomed the report's thoroughness. SHEFC indicated that such reviews always arouse some controversy—and rightly so, it said. However, I am sure that the review raised far more controversy than SHEFC anticipated. That gives an insight into how SHEFC thinks and shows that the concerns—and the inquiry—were justified.
I agree with Professor Bernard King in the conclusion of his article in The Scotsman on 24 October that the public could quite rightly ask why it required far-sighted intervention from the Enterprise and Lifelong Learning Committee to get SHEFC to listen. It is clear that mistakes were made and a flawed process was embarked upon. However, what has resulted is an important report that, during the course of its preparation, touched on many other issues of equal importance that need to be debated if we are to produce the enterprising economy and effective lifelong learning that we need in Scotland. I am hopeful that, when we return to the Parliament to debate the committee's report on lifelong learning as a whole, that too will be heralded by Professor King and others as miraculous.
It will come as a surprise to the members present that I am on my feet at all in the debate. What has happened is that Mr George Lyon has been closely involved in the purchase of Gigha, by which I do not mean leather trousers or a stud in his lug but an island. Unfortunately, he missed his ferry. It is an object lesson in the advantages of not being around the chamber before a debate about which one knows precisely nothing. However, I was caught by the enforcers and told that I had to lead for the Liberal Democrats.
I accidentally put on this tie, from my old academic institution, this morning. The University of St Andrews would fall about with laughter if it heard me talking about higher education. I had occasion to meet my second-year tutor, Professor Crawford, in later life. Twenty years on, he did not recognise me and said, "Funny you're a Stone. I had a student called Stone once who was among the worst I've ever had." I disabused him of that notion when I said, "That was me, Professor Crawford."
It would be wrong of me not to mention the UHI in the debate. It is an innovative move. By bringing people together through distance learning and by keeping young people in their homes or their home areas, it makes a huge contribution. I was talking to Alasdair Morrison earlier about a conference that was held recently in Stornoway, where representatives of no fewer than 16 nations gathered to share and exchange ideas. It was a two-way process. I encourage the minister to do everything she can to build on the good work that has already been done.
Research has been mentioned. The ability to carry out research is a great resource in our universities. While it is all fine and dandy to translate the diaries of Charles I or consider the subatomic structure of atoms, it would be good if higher education institutions could conduct research into some of the things that we already have. In renewables, for instance, useful work has been done that could be built on, which would help Government. We could harness the energy from the whole heap of ability out there. Such ability could work with the Scottish Executive and help many of us in what we are trying to do in our constituencies. For example, useful work is being done in Shetland on fisheries, but that could be built on further. That would be of assistance to ministers in the Scottish Executive.
One thinks of agriculture and crofting. Further work could be carried out on ways to diversify and make those industries more profitable and more likely to survive—that would help Ross Finnie. One thinks of genealogy. How often do we in the Highlands meet people who have come from the United States or Canada and wish to know who their forebears were? If work could be done on establishing databases, and on new ways of researching genealogy and getting into parish records, there would be something there. In the wider sense, it is about our heritage.
Research can be used to measure what we have and the means by which we can represent ourselves abroad. We can build up a resource out of that research that can be used to sell Scotland the product and get tourists to come to Scotland. I make no apologies for the mercenary point I am making. The research, if directed into such constructive attitudes—and indeed into the diversity of Scotland—can be used to our economic good.
It has been rightly said that the linkage between the private sector and research is not what it should be. David Mundell referred to that. Many years ago, I worked for Wimpey, whose research was lamentable. I then moved to an American corporation, Bechtel, which was significantly further ahead.
Will Mr Stone accept an intervention?
Gladly. I have to use up some time.
I thought that he might appreciate an intervention. He said that he worked for Wimpey. Was that the burger firm or the builders?
It is interesting that Mr Monteith should probe me on that one. It was the building firm, I can assure him.
My point is that there is a suspicion of academia in industry. If I were to ask a middle-sized Scottish firm why it does not get together with the University of Dundee, for example, on some project or other, people would say as soon as I was out of the door, "Stone is barking mad to suggest that." We need to get beyond that mindset. However, as has been pointed out, the problem also lies with university courts and with the academics themselves. In some ways, it is considered not quite on to get one's fingers dirty by talking to people who actually make nuts and bolts. We need to get out of that mindset. I know not how, but the report refers to that strongly.
I am not really a replacement for George Lyon—members may ask whether I would seek to be—but I shall conclude my remarks now. I would be pleased to hear the minister's comments about the UHI.
As members know, the inquiry was launched following concerns expressed about the SHEFC review of teaching and research funding. The committee was already committed to holding a substantial inquiry into the whole area of lifelong learning. It was against that backdrop that we agreed to examine this more immediate and specific concern about the funding of higher education.
The inquiry has illuminated several areas of concern and I hope that it has addressed and resolved some specific problems. It has also revealed the extent to which there are issues of strategic importance in higher and further education to which the Parliament must turn its attention. It is those issues that I want to address this morning.
I do not want to talk at length about the committee's findings on research funding, other than to observe that our higher education institutions and their departments spend far too much of their time trying to get their submissions to the research assessment exercise right. The process by which research is evaluated and funded is reliable and proceeds from a sound empirical basis. Unlike the evaluation of teaching funding, it has credibility within the sector, but it is also overly complex and expensive. The committee commended the thoroughness of the RAE, but it is fair to say that many of us had reservations about its cost.
Teaching funding, on the other hand, seems to be built on shakier foundations. The current division of the spoils has evolved from historical precedent. It does not seem to take into account or accurately reflect the costs of teaching or the needs of different sectors, nor are there any overarching policy initiatives. Furthermore, the committee found that the process of evaluating the teaching funding formula is prone to influence from the more powerful higher education sectors or institutions. The colleges and universities themselves jealously guard their independence, their territory and their share of the cake, but it is far from clear that their best interests match the demands of the Scottish economy or the needs of individual learners.
The report, naturally enough, concentrated on the outcome of the research assessment exercise, with money going to the departments that were rated appropriately at 3a, 4, 5 or whatever. Does Mr Macintosh agree that perhaps the whole RAE and the weighting given to various factors lead to the conclusion that more money should be given to blue-sky research? Does he agree that the funding councils, which are significant drivers of public sector financing of research, also give too heavy a rating to blue-sky research as opposed to applied research?
I have not yet reached that part of my speech, but I am glad that Brian Adam has predicted what I was going to say. I agree with much of what he says and I shall return to that point, but I shall return to the teaching funding formula for the moment.
The current situation does not inspire confidence. Whether or not deals are indeed done behind closed doors, there is no transparency, little accountability and, most worryingly of all, there appears to be no strategy whatever.
Given that structure for the funding of teaching, it is little wonder that, despite the huge expansion in student numbers in recent years, we have failed to do enough to tackle the age-old problems of privilege in and exclusion from higher education. Despite the fact that half our school leavers will now enjoy the opportunity to go on to further learning, the system does not yet do enough to offer or support opportunity for all.
There have been improvements. We have made progress in widening access and we continue to do so. Despite asking SHEFC to go back to the drawing board on the funding of teaching, the committee also recognised that a number of positive developments should be taken forward. Specifically, but not exclusively, we supported the 5 per cent additional funding for wider access students and the additional funding for disabled students and for part-time learners. The committee agreed that it did not want to turn back the clock on the interim arrangements where consensus exists in the sector.
The committee has flagged up some strategic issues that will need to be addressed in our on-going inquiry into lifelong learning. Hundreds of millions of pounds of public money are spent through the teaching and research funding formulae, but neither the current allocation nor the funding structure itself addresses the strategic direction that we would wish higher education to take. Potential learners have to chase the funding round the system rather than the funding following the student. Despite the fact that many people find themselves on courses that are not entirely tailored to their needs, there is little evidence that the system is tailoring skills and training to meet the needs of the marketplace.
We are aware that Scotland's future prosperity lies in increasing our productivity and creating a knowledge-based economy. Yet we still suffer from acute shortages of graduates in several sectors, particularly engineering, and far too many people are unable to access any learning provision at all. As well as recognising that we could do more to stimulate the supply of skills and training, the committee concluded that the economic impact of research spending in the higher education sector could be greater than it is. Not only did we identify the need to increase the total amount spent on research, we recognised that that money could be more strategically deployed.
Unfortunately, what we were not able to do, given the limited remit of the inquiry, was to consider the proportional amounts spent on applied and commercial research compared to pure academic study. That is the point that Brian Adam made in his intervention.
I would never suggest that higher education or lifelong learning should ever just be about addressing the needs of the marketplace or the Scottish economy. Education is an empowering force for the individual. It is the key to unlocking the door to social exclusion. It can help to build good citizens. It can also help our economy to prosper. However, I do not believe that the current structure for the funding of higher education achieves, or is sufficiently focused on those goals. We must assess whether we have the balance right between the different funding streams. That is a subject to which I hope we will return in our lifelong learning inquiry.
None of us should underestimate the task. Our Parliament has been around for three years. Some of our institutions of higher learning have been around for hundreds and have a record that they can be proud of, but they need to be made more accountable. If we are to spend millions of pounds of public money, we need to get the best return on our investment. Today's debate is the beginning of that process. I commend the committee's report.
It is a great pleasure to contribute to what has turned out to be a rather sleepy debate. I am sorry that Jamie Stone has left the chamber. I was about to defend him. Some of my colleagues suggested that he rambled throughout his speech. That may or may not be true, but I would take Jamie's amiable rambling over the discordant roar of Mr Lyon any day of the week. In fact, if Mr Stone were to stand in Argyll and Bute, that might raise the level of debate somewhat.
I shall begin my substantive comments where David Mundell left off. He put his finger on the nub of the matter when he said that the report, short and focused as it was, revealed areas of unresolved tension where further research and work needs to be done. That is clear not only in the specific proposals in the report, but also in some of its themes. I shall try to identify two of those themes, which may be helpful.
In the teaching funding debate, there is a question about the correct role of national guidelines and input as opposed to the autonomy of institutions. Ken Macintosh referred to that just a moment ago. There is also unresolved tension about the relative value of research—something that members of Parliament and other interested players must come to a view on.
I do not want to go over the discussion on the process that the funding council went through. We agree that the funding council was right to find a new basis, but the process was flawed and the results—certainly in the shorter term—were unacceptable. It is a matter of praise that the funding council is now fully cognisant of the fact that evidence-based research is needed. We should simply leave the council to get on with its work and come back with proposals.
There are two sides to the argument on whether there should be national or university responsibility for the allocation of funding. On the one hand, it is correct that the move from 22 funding bands to six is a decision that should have been taken at national level. There was almost total agreement that a greater degree of simplicity was needed. Members may ask why there are six rather than five or seven funding bands. The committee did not get to the heart of that issue—we do not know. There is an absence of rationale for six bands—I see Tavish Scott agreeing with that. Equally, if the committee emphasises over-reliance on historical funding positions, that should be tackled on a national basis.
On the other hand, the Royal Society of Edinburgh argued strongly for a greater degree of autonomy for vice-chancellors in dispersing funds. I emphasise that the committee did not agree with that. We rejected it because we wanted
"to ensure continuity of accountable development".
I am not absolutely sure what that phrase means, but I hope that it means that the committee has a commitment to ensuring that allocation within universities is transparent, fair and understandable. The tension will continue to run.
An issue that runs through the report is the relative value of research. Two particular issues arose. Members have touched upon the argument over level 3 funding. I want to add my voice to those who support the maintenance of funding for departments that are rated at level 3. The report points out that we are, in a sense, victims of our own success. Many departments that used to be rated at level 3 have moved up to level 4, 5 or even 5*. If we want to support departments on the basis of international excellence, that will lead to a strain further down the academic food chain, if you like. Level 3 departments should not be starved. There is almost total agreement on that and not just because of the effect that starving would have on retarding the development of new institutions. The criteria by which we judge the ranking of departments will be under review and it would therefore seem an odd time to starve departments of funds. The value of such research should be recognised and the total size of the funding package increased. I draw the minister's attention to the fact that that was a cross-party recommendation—it was reiterated by Ken Macintosh.
On commercial and non-commercial research, it is not a matter of great debate that everybody wants a closer tie-up between universities and industry. Nobody thinks that the current rate of economic growth in Scotland is adequate. We can consider international examples of how to improve Scottish economic performance and Scotland's skill base. However, a number of matters have not been touched upon. One is the position of intellectual property rights. A debate is raging as to whether the benefit of research should accrue to the state as the ultimate funder of research or to institutions. I would put a case for the universities being the recipients of the benefits of research. The funding is state funding, but if universities are to be imaginative and are to seize incentives, there must be a return on their partial risk. If we want the cultural change in universities that we say we want, we must make things easier for universities and ensure that they can benefit from intellectual property rights.
I want to say something about areas that are not easily commercialised. I associate entirely with what Mr Macintosh said about education and research not just being about advancing the economy. Members often talk about the need for cultural renewal and a view of the Scottish economy and nation that is wider than that based simply upon commercial success. Parity of esteem throughout research departments is critical to the culture of universities.
I hope that the report and the call for greater commercialisation in areas where it is appropriate are not taken as reasons to reduce funding to many areas—whether in arts faculties or elsewhere—in which research is ongoing, vital and as much a part of the new Scottish nation as commercialisation.
I applaud the committee for its report, which augurs well for its inquiry into lifelong learning. Alex Neil has an enquiring mind and he should not resist the temptation to rampage through our universities. To some, doing so might not be a bad thing.
I agree with the committee on many points, but I want to mention my support for funding for level 3-rated research departments in particular.
I want to talk about two areas—independence and widening access. Both topics are dealt with in the committee's report. Universities are private and independent institutions. They cannot be privatised—they are already private and independent, albeit they receive public funds. An acceptance of that will, of necessity, constrain the public policy that we shape in Edinburgh and that is shaped in London.
The committee talked about devolving powers to universities, but it did not recommend devolving further powers to safeguard public funds. A further debate is to be had on that.
I want to draw colleagues' attention to a book published by the Institute of Economic Affairs called "Buckingham at 25", which deals with the experience of public funding in British universities, particularly in respect of the University of Buckingham. The book says:
"Adam Smith was teaching at Glasgow University 250 years ago, and students then paid teachers whose lectures they attended directly. When the University offered him a salary to recognise his fame and success, he declined the offer, so strong was his belief in market principles. He had seen how inferior Oxford and Cambridge had become at that time, compared to the Scottish universities, and he attributed this to the fact that their academics enjoyed guaranteed salaries, which the Scottish universities could not afford; in Scotland they had to respond to their ‘market'."
Lecturers listening to or reading about the debate will be relieved to know that I am not suggesting that we return to such a directly funded system for lecturing—that might be a disappointment to my colleagues. However, there is an analogy in that universities are more or less on a guaranteed income. We debate in the committee, at SHEFC and using other opportunities the fine tuning of planning that income. Our universities must not be monolithic. Lecturers and students must have academic freedom and there must be management freedom to develop new courses and markets. The scope for devolution within public funding will be revisited by the Conservative party, if not by Parliament.
The Conservative party endorses the principle of widening access, but that principle is not new. It has existed since the inception of universities and is one to which we must rededicate ourselves time and again to ensure that it is applied in today's context. We must continually review the social, economic and cultural context in which universities operate. We endorse the widening of access, but we will question the Scottish Government's approach to reaching its goals.
I want to give an example. The University of Edinburgh is regularly criticised in news reports for not having enough Scottish students and for being relatively elitist—the same is often said of the University of St Andrews. There is criticism of the socioeconomic base of their undergraduates. However, we know that there is a bias on the west coast of Scotland against attending universities on the east coast—that is evidenced by the University of Glasgow's historically being that with the most home-based students.
The bias ensures that Edinburgh and St Andrews always draw from a smaller pool of Scottish talent than is available, making it highly likely that English students form a higher proportion of undergraduates than might be expected. That skews the debate about widening access at those universities. However, there is no short-term answer for that cultural attitude—no task force can immediately resolve it.
If we want truly to widen access, we must examine secondary, primary and nursery school education. Only this week I visited Smithycroft Secondary School in Glasgow, which is part of that city's pilot programme for community learning. The programme gives greater devolved management to pre-school centres and primary schools that are clustered around a secondary school. They share a common educational approach and have a bursar who takes the administrative load from the head teacher. They can and do take their own educational initiatives and, crucially, are able to work right from the early years, at pre-school level, with early intervention programmes.
That is how we must first approach widening access. By equipping pupils with the ability to gain entrance to higher education in the first place, we will surely widen access far more completely and openly than at the moment. Without opening access in schools, all initiatives to change cultural attitudes—such as special schemes to recruit undergraduates and better financial packages for students—will come to nought.
I ask members to keep speeches to a maximum of five minutes.
I hope that the Parliament will welcome the report of the Enterprise and Lifelong Learning Committee on the inquiry into the SHEFC review of teaching and research funding. The inquiry is important and timely and its findings and recommendations—which were agreed by all members of the committee—deserve to be listened to and acted on.
The committee was right to initiate the inquiry in March 2001, given the disquiet that was being expressed about SHEFC's proposals. Much of the concern centred on the proposed changes to teaching funding and I will confine my remarks to that aspect of the review.
There has been a good deal of press coverage of and interest in the area of the committee's inquiry. The committee employs robust and unmistakably critical language. Such vigorous expression is used for a purpose—not to attract newspaper headlines, although it has undoubtedly done that, but to emphasise the gravity of members' concern.
The committee's worry is not that SHEFC's proposals were radical and controversial, but that deep-rooted change—if it is to win the support of the institutions that are to be the subject of that change—requires a serious, evidence-based approach. The higher education sector was dismayed at SHEFC's proposals, which envisaged reducing 22 subject groupings to six.
The general view of the higher education sector was that the earlier stages of SHEFC's review of the methodology for funding teaching were broadly acceptable and transparent. The final stage provoked alarm when it became apparent that SHEFC had abandoned its evidence-based approach in favour of a crude, unsubstantiated exercise, which merely averaged out existing funding levels for 22 subject groups into six groups. SHEFC's radical departure from its earlier approach was widely regarded as inexplicable or, at best, lacking sufficient justification.
The evidence taken by the committee mirrored the higher education sector's puzzlement. Although there was considerable support within the sector for a reduction in the number of subject areas—to simplify the system and make it more transparent—the lack of a proper analysis in support of the proposed reduction was a recurrent complaint.
The committee has found that SHEFC "profoundly mishandled" the teaching review and did not appreciate that any fundamental change to the allocation of funding must be evidence based. I believe that that finding is correct, because it reflects the evidence that the committee took. The committee believes that, without a thorough analysis of the costs involved in teaching a higher education course, SHEFC's proposal is gravely deficient.
SHEFC has £440 million of teaching grant to distribute among 18 universities and other institutions. The distribution of such a large sum of public money must be seen to be carried out using a set of agreed, objective criteria and must be open to proper scrutiny.
I acknowledge—as does the committee—the fact that since we conducted the inquiry, the proposed distribution of funds has been modified and the Executive has made extra funds available to mitigate the problem. Nevertheless, I hope that the minister takes on board the essence of the committee's recommendation that an independent review body outwith SHEFC be established. I hope that she will give us comfort on that when she speaks later in the debate. I hope that she takes on board the recommendation that such a review be carried out so that its findings can be implemented in academic year 2003-04.
The committee accepts that the present arrangements should apply in the interim. Of course a number of positive aspects of the proposals that Ken Macintosh and Alex Neil mentioned, such as the additional funding for disabled students within the main teaching grant, should be acted on.
A generally acceptable long-term solution will be possible only if a satisfactory degree of independence is injected into the process. I commend the committee's inquiry to the chamber.
I declare that my daughter is a student at the University of Abertay Dundee. I am not sure whether that is a declarable interest, but it certainly helps in refreshing my long-in-the-tooth memories.
I welcome the debate and the committee's report. The committee has done our Parliament and the people of Scotland a great service. Although I appreciate the difficulties of working within fixed and limited budgets, it is clear from the report that there are many flaws in the funding council's proposals.
I will focus on the proposed exclusion of level 3-rated research institutions from the receipt of research assessment exercise funds. Removing virtually all funding for research from the modern universities and university colleges could set research on the wrong track. It could recreate the pre-1992 binary divide in Scotland. Destroying the research base in those institutions would undermine the whole Scottish research base and be detrimental to the education of 35 per cent of Scotland's higher education students.
The funding council proposal will have direct consequences for nursing and professions that are allied to medicine, tourism, media and financial services. All those areas are essential to the life and work of Scotland.
Current and proposed funding models are based primarily on the research assessment exercise, which is a measure of past performance, principally in terms of the output of articles in academic journals. Such a mechanism alone cannot respond adequately to the need for funds in new and emerging research areas that are relevant to our national economy.
Long-term Scottish research capability depends absolutely on maintaining a diverse research base and responding to new opportunities whenever and wherever they arise. The removal of funding from level 3-rated departments is likely to have the opposite effect by overconcentrating core research funding in a limited number of traditional academic disciplines and in a smaller number of institutions.
In eight years of research funding, the new universities have a good track record in high-quality research that is of direct benefit to Scottish industry and society. The University of Abertay Dundee, for example, has opened the international centre for computer games and virtual entertainment, supporting a new and important part of the Scottish economy. The university has launched, and secured venture funding for Securivox, a spin-out company specialising in voice-recognition software that is developed at the university. The university's scientists have become the first in the world to successfully breed an eagle using cryopreserved sperm. That is a breakthrough for endangered birds of prey worldwide. Proposals for a centre of tourism research are also under development. What we see there is typical of a wide range of activity, which the Parliament should encourage at every opportunity.
It is impossible to see the logic of cutting core research funding from institutions with such obvious research potential. Recognising that it would be detrimental to the research base in England, its funding council dropped that idea. The Royal Society supported that decision and indicated that middle-ranking departments have a vital role to play in sustaining a vibrant research base. If modern universities in Scotland were disadvantaged in comparison with similar institutions in England, it would be damaging for individual institutions and for the Scottish sector as a whole. The RAE's definition of a 3a quality rating is:
"Quality that equates to attainable levels of national excellence in over two thirds of the research activity submitted, possibly showing evidence of international excellence."
It makes no sense for a nation the size of Scotland to turn its back on research rated at that quality and with such economic and social potential. I congratulate the committee on drawing these crucial matters to the attention of Parliament and the Scottish people. I expect the funding council and the Executive to take action.
Westminster could not cope with a debate on this kind of issue, which is fundamental to Scotland. It is a great pleasure to see our Parliament seriously, conscientiously and properly addressing such crucial issues. I was a member of the Scottish select committee that looked into these problems. We made recommendations to the Westminster Government, which did nothing about them. It is time that the Scottish Government did something about these issues.
In evidence given to the committee, we were told that there was no lack of finance and ideas, but a major lack of business acumen to bring the ideas and finance together. That issue should be close to the heart of the Minister for Enterprise and Lifelong Learning. I would like more energy to be put into the improvement of the quality and output of business schools in Scotland. We must produce Scottish entrepreneurs who can give our nation a cutting edge. We have the means of turning Scotland into one of the intellectual and entrepreneurial powerhouses of Europe. If we have the wisdom to invest in the spectacular array of training and research institutions—ancient and new—which exist within our borders, we will never die by the intellectual skills of our people. We have those institutions. What we need now is action to turn the potential to the actual and give Scotland that future. I wait for that action from the Government.
I declare an interest, in that I am a member of the court of the University of Strathclyde—at least I am at the moment. I make this speech as deputy convener of the Enterprise and Lifelong Learning Committee.
Every cloud has a silver lining. The inquiry was brought about by, if not a crisis, certainly an attack of chronic indigestion in the higher education sector.
This has perhaps been the first opportunity in more than a decade for a parliament to consider closely the future direction and funding of higher education in Scotland. It was interesting and challenging to be a member of the committee involved in this inquiry.
I emphasise two points to the minister about teaching funding. First, paragraph 100 of the committee's report recommends
"that the Minister establish an independent review body from outwith SHEFC with a remit to examine the costs of teaching, taking into account UK comparators across all subjects".
That may sound like an unremarkable paragraph, but the tang—for some I expect it will be the sting—is in the independence element and also the recommendation that the review of teaching costs take place on a UK-wide scale. In my judgment, it would be unacceptable for SHEFC to undertake that review, as such a review would have no credibility. Examining teaching costs is sensitive, but it is vital. The sector deserves a reassurance of independence and objectivity in such a review. If one were to keep it in-house within the higher education sector, I envisage difficulties emerging. I have read the response from Universities Scotland to the inquiry report; it is clearly shy about an independent inquiry. It thinks that that would be an unfortunate slap in the face to SHEFC. Finer feelings on this issue are not of particular significance. What matters is that we are talking about significant sums of public money and the need for reassurance that they are being effectively and properly distributed. I see from the response from the University Council of Modern Languages that Professor Millan applauds the idea of an independent review. Those two responses show the conflict that exists and the need to take this review outside the sector.
If I get a tang from that part of the report, what really whets my appetite is the issue of research funding. Research activity is the lifeblood of universities. It brings staff of high calibre to our institutions and maintains them there. That in turn is what attracts good students and helps our universities to maintain the highest academic performance.
It is worth considering current funding sources for research income in Scotland. It has been made clear in the debate that SHEFC accounts for approximately a third of that. The rest comes in varying proportions from research councils, UK-based charities, UK Government bodies, UK industry, the European Union, overseas and other sources. It is significant to pay attention to where those funds come from. Doing so allows one to make a great deal of sense of paragraph 135 of the report, which is the recommendation on how we might approach funding of research in Scotland in the future.
One of the most constructive suggestions by the committee is that the minister should establish a research and development strategy for Scotland, not only because that seems to marry well with the science strategy that she announced in August, but because it offers the opportunity for a focused and well-informed approach to the concept of research in Scotland. Research should not be viewed piecemeal according to what institutions are trying to do. We should take a strategic overview and focus on the areas in which funding should be sought.
I emphasise to the minister that if the strategy is devised and is good, sound and has credibility it is vital that the funding issue be sensibly addressed. What I like about paragraph 135 is that it is a sensible effort to devise a structure whereby funding may be properly and adequately considered.
I am not by nature diffident, but on this matter I have an overweening desire to be bold. I call on the Minister for Enterprise and Lifelong Learning to be bold with me. I am putting my committee hat to the back of my head and donning my Goldie bunnet. The report is a good architect's plan for the future; it lays the foundations. However, we must be ambitious for the future, not for reasons of introspective self-indulgence—not a charge that I would care to have levelled at me or that I would care to see levelled at any university senate. We must have ambitions and aspirations for our universities, for our economy and for Scotland.
When we consider what is happening elsewhere, there are reasons for concern and disquiet. As has been said, it is clear that in Europe certain countries are making significant increases in research funding. In the United States some individual university departments enjoy funding at a level that would make some of our institutions salivate.
I urge the minister to pay close attention to the recommendations in paragraphs 100 and 135. Dangers are lurking if we do not do so. One of the dangers is that our universities will face academic impoverishment. The other is less visible and far more insidious. It is that south of the border many people have no understanding of devolution and many people in the academic community are frightened to entrust their professional careers to a system that is unknown to them. The way to rebut that is to make a clarion call for the best possible approach to research in Scotland that the Parliament is capable of devising. I make no apology for being the siren to make that clarion call.
SHEFC has come in for a bit of a battering in this debate. However, it is important to put on record two things that the funding council got right. First, it was right to simplify the funding model. There are anomalies within that hopelessly overcomplex system, which has 22 different price lists for different kinds of courses. Furthermore, the council was right to try to establish a new system that was properly evidence based. However, it could be criticised for abandoning the process halfway through to adopt what might be called a quick and dirty solution. Although the council responded to the issue of the pricing of clinical medicine, it did not respond to a number of equally valid cases. We need a review of teaching funding. The Enterprise and Lifelong Learning Committee is right to argue for that.
However, we should not underestimate the technical complexity of any such review. We will have to reconstruct a system that forms the core of the way in which universities in Scotland are funded. Whatever is done will be very closely examined throughout the university system and there will be many debates and arguments—not just at the margins—about how to develop the process. For example, it is not easy to establish the price of a course in accountancy against the price of courses in particular engineering specialisms.
Secondly, the outcome will have a huge organisational impact on universities in Scotland. The letters that members might have received from people up to now will be nothing compared to the letters that they will receive once the new system is proposed and seems likely to be introduced. There can be no half-measures in this kind of exercise; it needs to be done well, with a proper evidence base and the involvement of everyone concerned.
I very much support the arguments in favour of the retention of formula funding for level 3 research outputs. Instead of being forward-looking, the RAE is retrospective; it is based on the past four years of a department's research outputs rather than on its potential outputs. Obviously such a system will privilege established figures and areas of inquiry. Furthermore, the system is not a very proactive means of identifying promising new research; it disadvantages cross-discipline research because it is discipline-focused; and it makes it very difficult for new departments with new areas of inquiry to get established. Level 3 funding needs to be supported because of arguments of that kind.
However, Andrew Welsh gave the most important reason why level 3 funding should be retained. SHEFC's proposals would seriously disadvantage the new universities. Perhaps at this point I should declare that I am a former member of staff of Glasgow Caledonian University. The new universities have been working very hard to establish their research base. Research is vital not just for the commercial and business reasons that Alex Neil strongly highlighted but because many universities define themselves by how they advance knowledge. That process critically underpins university teaching. Without research, there are no universities.
As Annabel Goldie pointed out, RAE funding accounts for 34 per cent of university funding. As opposed to other types of funding, it provides the research infrastructure within universities. We must really bear in mind that such funding is geared not just towards commercial advantage or scientific development, but towards the teaching process.
However, we must also bear it in mind that the RAE is wholly based on a system of research selectivity. Although an examination of the outcomes of the past three exercises shows that the number of papers submitted and meritorious outcomes has increased every time, there has been no corresponding increase in funding. As a result, people in universities feel that although a higher gearing has been placed on those institutions, there has not been a significant increase in funding. The committee has identified that danger as a priority for the universities and for Scotland and, on that basis, I very much welcome the committee's recommendations.
Although we started this debate with extra time, we have managed to catch up with our schedule. I must therefore ask members from here on in to stick to a five-minute time limit.
Uniquely, my constituency has within its boundary three Scottish universities—one ancient, one modern and one new. As I also represent Glasgow School of Art and the Royal Scottish Academy of Music and Drama, I take a strong interest in higher education. I am therefore grateful to the Enterprise and Lifelong Learning Committee for the very high quality of research in its report.
I particularly support the analysis by Des McNulty and Annabel Goldie of the importance of research to universities. I will concentrate my remarks on the measuring of research that informs funding decisions and on sharing it with all universities either where the performance merits such an approach or where it directly benefits the country.
We know that research funding is a highly competitive environment. Research is essential to the development of Scotland's knowledge economy, and universities are overwhelmingly the main source of research output. Overall the Scottish universities have been strikingly successful with research grants and indeed received £368.5 million in 1999-2000. Furthermore, universities regard research performance as a vital indicator and a key component in attracting research stars.
However, the new universities believe that the current mechanisms favour the ancient universities. As research work confers status on either a department or an academic, it in turn increases a university's reputation, and subjects that attract a lot of research benefit as the work itself becomes better informed. As a result, the universities that are successful in securing research funding are also successful in attracting greater student numbers and in creating a better learning environment.
With the new universities trying to build their reputations and to fit in with the eight established universities as a result of their new-found status and role within the education sector, SHEFC's proposals to remove research funding from level 3-rated departments could not have come at a worse time. The situation concerns me greatly. As Glasgow Caledonian University in my constituency admits a much higher percentage of students from low-income backgrounds, it might be undermined by this decision in the longer run.
The abolition of the two-tier degree system in the early 1990s was a most welcome change to Scottish education and expanded the number of universities in the sector from eight to 12. We should protect the aim of achieving a single sector for the awarding of degrees. If SHEFC's proposals are not reversed, in effect we will return to the binary divide. The results could not be clearer. The current allocation of research distribution puts the older universities at the top of the list and the new universities at the bottom.
Some subjects such as nursing, midwifery and professions allied to medicine will not have the opportunity to develop. Research on those subjects is still in its infancy and removing support from level 3-rated departments will affect the quality of disciplines such as radiography. We need only consider the importance of diagnostic treatment in the advancement of medicine to appreciate the direct advantage of funding research at institutions such as Glasgow Caledonian University. As members have already pointed out, that type of applied research receives less support than pure research. For example, applied research is required in tourism to support the fact that it is a priority of the Executive and the Parliament.
Although many more aspects of the committee's report are very important, I will mention only two more. The development of centres of excellence in our higher education sector must be driven forward with greater speed. It is important to introduce the right mechanisms and systems that will establish the location of such centres around the country. Secondly, I am pleased that the minister recently decided to award Glasgow School of Art small specialist institution status. The institution would suffer a dramatic 14 per cent reduction in its teaching funding if the SHEFC proposals were accepted.
In conclusion, I urge the Parliament to reject the SHEFC proposal to remove level 3 research funding. We must support the new universities, as they are crucial to access and participation, to which the Parliament is committed. Let us have more applied research.
This is an important debate, focusing not only on the SHEFC report, but on many of the general issues surrounding it. Our new universities have been making their mark over the past few years and the Scottish economy is at a crossroads. It is very important that we get the funding, role and priorities for our universities right.
Higher education has three roles. First, it must equip Scotland for the 21st century. Secondly, it has to maintain Scotland's reputation in those areas in which we excel. Thirdly, it has to provide all people with the opportunity for self-development. We cannot consider higher education in isolation; we must also consider further education and the role of our schools. We must ensure that they all have a clear role and that there is a link between all the institutions, taking a holistic view of education at this important time.
I am concerned by the blurring at the edges that has been taking place in recent years. Schools are competing with colleges for the same students; colleges are competing with universities for the same students; and universities are now offering access courses, which it has traditionally been the role of colleges to do. Universities sometimes seem to offer those courses as an incentive to get people in to fill the seats. There is a sense that it is dog eat dog out there and that too many of our institutions have adopted a bums-on-seats strategy. I am concerned that many of our young people do not find themselves in the right lecture theatres. We must ensure that what is done is done for the benefit of the young people in Scotland, not for the institutions.
There has been an upward trend in the presence of accountants and financial executives in the higher education sector over the past few years. Many of our higher education institutions are now indulging in a lot of advertising. Bernard King, the principal of the University of Abertay Dundee, who is sitting in the public gallery, has received a lot of praise today, and I join in that praise. I visited the university recently and was highly impressed by initiatives such as the international centre for computer games and virtual entertainment. It is an outstanding university. Nevertheless, when I was watching television last night, I saw an advert for the university on the ITV network that said simply:
"University of Abertay Dundee: It's a real education!"
and gave a telephone number. Why are universities spending so much money on advertising and public relations? Why is that money not being put to better use? Is it because something somewhere is out of sync and the universities have too many places to fill? That problem must be addressed by the minister.
I hope that all higher and further education institutions find their own niche and role in Scottish education, and I would like there to be more collaboration. At the moment, an initiative is being undertaken by the University of Aberdeen and the Robert Gordon University to ensure that they do not compete for the same students. They are speaking to each other to ensure that they have individual and distinctive roles.
I shall address a couple of the recommendations in the report. The first concerns the role of the new universities. Many members have referred to the need for level 3 research funding. That funding is extremely important. There is no point in creating new universities and then discriminating against them; they must receive their fair share of research funding. The philosophy and theology department of the University of Edinburgh receives the same amount of research funding through the funding councils as most of Scotland's new universities receive in total. For example, that department receives the same amount of research funding as the whole of RGU. Is that right at this crossroads for the Scottish economy? We must address that.
Level 3 research bids must be addressed, as we must give the new universities seedcorn funding. Europe's oil and gas industry is based in the north-east of Scotland, yet BP is spending tens of millions of pounds on research and development in universities south of the border. Surely, we should encourage the funding for such research to be allocated to areas of expertise, where it makes sense, such as the north-east of Scotland. Our universities want to bid for that research funding but have not received the seedcorn funding that would enable them to build up a track record and attract private sector funding.
BP is a global company and operates on that basis. It seeks research that is of value at a global level and will invest its money in the best research wherever it is—anywhere in the world. It is not just investing south of the border; it invests wherever the best research is being undertaken. We must concentrate on the areas in which we have the expertise.
The member has hit the nail on the head. The key is to encourage our institutions to become the best in the world, so that the academic research for the oil and gas industry will also be based in Scotland. That is what the universities in the north-east want to achieve, but they need support from the Government to get there.
My final point concerns commercialisation. Scotland has the second-highest rate of publication of research papers in the world—only Israel beats Scotland—yet Scotland's economy is lagging behind while the Irish and Finnish economies are racing ahead. Surely, there should be a link between our academic expertise and the Scottish economy, to allow it to make inroads. Only half of the 14 per cent of UK graduates who are educated in Scotland stay here. I hope that commercialisation can play a role in providing jobs for our people.
There are many issues to consider. I hope that the minister, the committee and the Parliament treat them with a great deal of urgency.
As many members have said, education and research are becoming ever more important to Scotland and its economy. It is vital that the organisation and funding of teaching and research are responsive to the needs of today and tomorrow and that, in its plans, SHEFC is able to demonstrate clear support for the review. However, that has not been the case.
Scotland has a good international track record in research. For example, the University of Aberdeen undertakes groundbreaking work in telemedicine and RGU does so in renewable energies and oil and gas engineering technologies. The situation is similar in many institutions throughout Scotland. Scotland receives more research funding than might be expected—some 11 per cent of UK funding, rather than the 9 per cent that would be expected per capita. That demonstrates the excellence of a lot of Scottish research. It is right that bidding for research funding should be competitive. Scottish science needs to compete on UK and international levels.
The committee has therefore largely supported the current RAE system for the assessment of research. However, as we develop our knowledge economy, we will need research that supports that development. Commercialisation is a key part of Scotland's future. It is right to question whether the number of published papers should be the main or only criterion for the assessment of research, and whether we should not give equal weight to such things as the numbers of patents that are registered and the creation of spin-off companies. A clearer focus is required from the universities on the needs of the economy. We have said that, when universities benefit from RAE funding, they should also demonstrate the benefits of that research to the economy.
Scotland's new universities are often focused more on applied research and areas that support industries such as the oil and gas industry, which was discussed earlier. We must ensure that those universities receive adequate funding for that research, even though that research is at level 3. I find it encouraging that the quality of research is constantly improving, as universities produce more and better research. That puts pressure on funding. We must ensure that all sources of funding—whether private or public—are identified and that we grow the total research and development pot.
Some partnerships to develop innovative research have been established in areas of commercialisation, such as the Alba Centre and the Institute of System Level Integration. Other areas, such as the oil and gas industry and biotechnology, would benefit from that approach. The oil and gas industry is a major industry in Scotland and it is extremely important. Its future in the UK depends on several factors, the first of which is having skilled people. Another critical factor is constant technological innovation, whether in reservoir management or sub-sea engineering.
Will the member give way?
If Brian Adam does not mind, I would like to continue.
The establishment of an energy centre of excellence that focuses on applied research, which could be used in the North sea and exported to other oil and gas sectors, would give a major boost to maintaining Scotland's lead in some of the technologies associated with oil and gas. I strongly support the committee's recommendation that consideration should be given to the establishment of intermediary research bodies. However, I make the point that we cannot be the best at everything and we must be clear and focused about where we can be world leaders.
I welcome the Enterprise and Lifelong Learning Committee's report and commend the committee for its thorough research.
I would like to widen the debate a little and examine the future of higher education funding. The difficulties that are identified in the committee's report will continue to arise as long as the present system for allocating resources to universities and colleges exists. Whatever formulae are devised, it will always be argued that they are unfair to one institution or another. There will always be winners and losers.
In the long term, we should consider a wholesale review of higher education funding. We should free our universities from the dead hand of state control. Universities must be able to make long-term plans for the future, but the existing funding arrangements do not permit that. The Scottish Conservatives want the Government to endow our universities, giving them financial security and the ability to plan ahead. Endowed universities would be provided with a lump sum from the Treasury from which they would generate their own income streams. The necessary funds could come from securitising the student loan books and selling future student loans or from the proceeds of future privatisations or asset sales, such as third-generation licences.
Reducing the burden on the taxpayer would be a more efficient use of resources than simply repaying debt. The great advantage of endowment is that it would give universities back their independence. They would have the chance to compete and excel in an increasingly global higher education market. The unnecessary rules that hold them back would be replaced by variety and competition.
I want to clarify where the member is coming from. What does he think should be the highest priority for our higher education sector: generating income or teaching future generations?
Of course the highest priority should be teaching future generations, but what is the best mechanism for achieving that objective and delivering higher standards of education? By removing the uncertainties in the present system and moving towards endowed universities, we could aim for that objective.
We want universities to forge new relationships with business and enterprise, as happens in the US. Endowment would mean an end to the annual readjustments in funding that create redundancies and uncertainty for university staff as student numbers fluctuate. Universities would be freed from political control. They would be free to determine staff salary structures and the number of student admissions. They would be free to run high-quality courses that reflect the demand for skills from the public and private sectors. They would be free to grow as centres of excellence and establish themselves as world leaders. All parties in the chamber should support those aspirations and I am sure that if they were to lay dogma aside, they would see that it is the way forward for higher education.
It is clear that endowing universities would not be an inexpensive business, nor would it happen overnight. It would be a staged process and could take place over a time scale of several years. As the level of endowment increased over the years, our universities would move from being dependent on the state for funding and would start to enjoy the benefits of greater freedom.
As my colleague Brian Monteith said, universities are already private bodies. Therefore, my proposal is not about the privatisation of higher education; rather it is about leaving the institutions to set their own priorities and to decide how their money should be spent.
I welcome a real Tory to the chamber—it is nice to have them back. Murdo Fraser's proposal is the sort of nonsense about the way forward for higher education that we have had to listen to for the past 15 years.
Will Murdo Fraser explain how universities would be accountable to the public if they were given the new freedom that he proposes? What is the sense in setting Government priorities, which even the Conservative party sometimes supports, if that freedom does not match those priorities? The member owes the chamber an explanation.
I do not think that Pauline McNeill should describe my proposal as nonsense. It has been interesting to see the number of Conservative policies that were once described by the Labour party as nonsense that Labour has adopted over the past four years.
On responsiveness, we should look back to the glory days of Scottish education. During the 18th and 19th centuries, Scottish universities led the world. They did not need state control to dictate how they should set their courses or how they should be run. Let us look at the examples of the past.
Universities that are endowed by a future Conservative Government would have to give a guarantee that they would not charge top-up fees, so that they did not restrict access for those from less well-off backgrounds. Other than that, they would enjoy the freedom of not being dependent on the drip-feed of Government money. The result would be universities that provide a better service to students, employers and the nation.
Scottish universities built an international reputation in the 19th century, when they educated the doctors, clergymen and lawyers of the day. We want to regain that pre-eminent position. We will achieve that if we endow our universities and let them break free from the system of state funding.
Mr Stone, the member has finished his speech.
Nice one, Murdo.
I had not realised that the previous speaker was going to develop our interest in modern history. That was a useful trek down a road that, thankfully, the great majority of Scots have always rejected—more recently, the great majority of people in the United Kingdom resoundingly rejected it yet again.
I am conscious of being the new boy on the Enterprise and Lifelong Learning Committee and come to this debate with both alacrity and anxiety. I was not a member of the committee when it took evidence so my speech depends on the documents and the Official Report of the evidence. I thank my fellow committee members, the convener, the advisers and the staff for their welcome and for what was a pretty rigorous induction. Bodies outwith the Parliament could learn from that induction process.
My bedtime reading was immediately supplanted by quite a volume of evidence through which I waded. I pay tribute to the work of Des McNulty, who is my comrade, my colleague and my neighbour, in the chamber and in my constituency. As I went through the Official Report and the documents, it became clear that he played a significant role in the work of the Enterprise and Lifelong Learning Committee and that he leaves a space to be filled. Despite his many talents and skills, he does not have the power of bilocation. As a result, our sad loss is the Transport and the Environment Committee's gain. All members of the Enterprise and Lifelong Learning Committee will join me in acknowledging the work that he did. It is no mistake that he is sitting beside me today. I intend to have him beside me—metaphorically, at least—as we go through other inquiries.
Like many members, it has been later on in life that I have paused and tried to reflect on what took me to university for a law degree and postgraduate work. If Frank McAveety were present, he might remind me of the lyrics of a certain song, but when I think of whatever it was that I learned at law school, I can genuinely say that I am not sure of the relevance of much of it, particularly what I learned in the first two years. I mean no disrespect to the great regius professor, Professor Walker, but I am convinced that I learned nothing of relevance in later life about contracts at the University of Glasgow.
I am proud to say—
Here is someone who learned something.
In defence of Professor Walker, I ask whether the problem could have been the student.
It may well have been, but I count myself among hundreds of students at the University of Glasgow who eventually managed to persuade the university to think again about some of its practices in running the faculty of law.
I am conscious of some of the more difficult tasks that will flow from the committee's work, as I suspect that, for good or for bad, much of my professional life was dominated by what I learned in the following three years at university. My studies were dominated by curiously diffuse subjects. As a practising lawyer, I benefited more from my courses on jurisprudence than from the allegedly directly applicable subjects. The law of delict, as taught at the University of Glasgow some time ago, bears no resemblance to the work undertaken by individuals who work in private practice. However, what I learned in relation to items as diverse as—dare one say it—Hofeldian analysis, played a role later in my life.
I turn now to today's debate. Marilyn Livingstone struck the correct note, given that the Enterprise and Lifelong Learning Committee's report was produced following a short and intensive set of hearings. She said that the report was sufficiently important to merit the interruption of the committee's programme, but that it must be seen as a beginning.
David Mundell mentioned the role of funding outwith the funding council's structures. I am sure that, were he here, he would welcome Scotland's performance in attracting UK-based charitable funding. We have a good story to tell about our record of success. His recognition of the impact of funding points us to the fact that, as far as research is concerned, we are dealing with a larger issue than simply SHEFC distribution. The Enterprise and Lifelong Learning Committee heard evidence of 28 years of underfunding. Because we work with David Mundell in the committee, I am sure that we will be able to establish with him the essential ingredients for a full act of contrition for those 28 years.
I took seriously Annabel Goldie's points about the independent inquiry. I am not sure that I disagree with her that the independent inquiry should be outwith the sector. I want to see independence and we want to ensure that the contributors to any inquiry are devoid of institutional interest. I mean no disrespect to some of those who gave evidence, but it seems evident that there was an institutional interest on the part of some of the contributors. Annabel Goldie will have a better sense of the flavour of that evidence. We want to ensure that there is independence from institutional interests, but we should not be of light heart about that. South of the border we have four or five Scottish chancellors and vice-chancellors. We also have people who are experienced in resource allocation. The evidence to the Enterprise and Lifelong Learning Committee shows that we have a keen contribution from the business sector. We have the ingredients for an independent inquiry and I encourage the committee to continue to consider the matter.
First, I apologise for missing part of the debate. I was attending an educational visit by my old school, Bell Baxter High School. I am pleased to see that the visitors are still in the gallery, although they are probably about to make a beeline for the exit now that I have got up to speak.
I welcome the opportunity to participate in the debate. I was a bit concerned that because I was not a member of the Enterprise and Lifelong Learning Committee my contribution might not be entirely relevant, but having heard Murdo Fraser's contribution and the first three and a half minutes of Brian Fitzpatrick's perhaps I need not worry too much.
I want to address mainly the funding of teaching. The key recommendation of the committee's report is in paragraph 100 on page 27. It reads:
"The Committee recommends that the Minister establish an independent review body from outwith SHEFC with a remit to examine the costs of teaching."
It seems surprising—and I think that the committee shared my view—that SHEFC reviewed funding, but did not review the costs of teaching. That is rather bizarre. The costs of teaching have to be examined in some detail, because we need to look at the implications of two decades of increases in student numbers that have not been matched by increases in financial and teaching resources. That has led to a much poorer teaching and learning environment in our universities. We have larger tutorial groups, larger lecture classes, pressure on laboratory and information technology facilities and fewer library books per head.
Another key issue that must be addressed in the near future is lecturers' pay, which is falling badly behind that of other sectors. Combined with issues such as student debt, which is discouraging people from doing postgraduate research, that will lead to problems in finding university teachers.
A review of teaching costs is essential if we are to ensure the long-term future and quality of higher education in Scotland. I welcome the real growth in higher education funding that is a result of the efforts of the Liberal Democrat and Labour partnership Executive, but we have a lot of catching up to do to make up for the problems of the past two decades.
Above all, universities need secure, long-term funding to plan ahead for the provision of their courses. I am a little concerned that SHEFC's report might have more to do with balancing its books to meet the costs of clinical medicine than it has to do with meeting the long-term needs of higher education as a whole. We need to consider more imaginatively the way in which we fund medical training to ensure that we have the future supply of medical professionals that we need, although not at the expense of other higher education funding.
I want to offer some words of caution about paragraph 108 of the committee report on the proposed 5 per cent additional costs for providing education to wider access students. My key concern is that that would reward retrospectively rather than encourage change. The additional 5 per cent will be based on the number of students who come from areas that are currently under-represented in higher education. That does not guarantee any improvement in access. Some higher education institutions would get additional resources because they have people from those areas but would not necessarily have to do anything to encourage even more people from such backgrounds to take up higher education. Brian Monteith made some important points on cultural attitudes in that respect.
We need to encourage change in our universities so that institutions can go out and recruit people from under-represented areas. That means building up links with schools and further education colleges. We have to change the culture in many schools. I am concerned that in many secondary schools in parts of Fife—outside my constituency—the culture is not one of going on to higher education. We need to change that culture and universities need to be given support to help them to go out and make that change. They need to be able to consider transport and other issues.
I want to raise access for the disabled in relation to the University of St Andrews. Perhaps it is easier for newer universities to deal with such issues. The University of St Andrews has more than 370 buildings, many of which are very old and some of which are listed. That makes it difficult to provide the improvements that are needed. I know how difficult it is to get in and out of some of the buildings because in a former life I helped to move furniture in and out of some of them while they were being refurbished. It is extremely difficult for such buildings to be adapted to meet the needs of disabled students. That should be considered in the context of funding.
I urge the committee and SHEFC to consider issues about wider access and improvements for the disabled in a way that ensures that the funding is there to support change as well as to reward those who have already made changes.
We now move to closing speeches.
I must declare an interest in that I advise two departments of Robert Gordon University.
We began today's debate with some interesting comments about the lack of an evidence-based approach in the SHEFC review. That transparency or lack of it has been something on which the university sector has lobbied every member in the past few months. I hope that that will send a clear signal about where we need to go next.
We must accept that research is vital and that commercialisation is essential. If we do not take that as the basis for developing the technical aspects of higher education, we are wasting our time—the two things must be linked. Jamie Stone called for a better relationship between business and universities. Similarly, when Murdo Fraser talked about the American model, he mentioned the great proximity of business interests and the economy, and the higher education sector. There is a lot that we can learn from that.
Other comments made during the debate related to the costs of getting patents and the protection of intellectual property rights. That is an area of interest to many people and the Parliament should look into it more closely. Scots law on IPR is slightly different from that in the rest of the UK. Certain bodies in the legal fraternity are very interested in that at the moment.
A major issue has been the scale of funding for research. I support whole-heartedly the calls from members throughout the chamber for the maintenance of funding for departments rated at level 3. How do we improve new places and new knowledge? Elaine Thomson talked about the new technologies. How are they worked up? It is not necessarily done through old-style traditional units.
We have to look forward, and if we are to do so, the Executive cannot simply say that it has put more money in. It is not about how much money has gone in; it is about how that money was focused and accessed and whether the funding will be sustainable. Sustainability is one of the big issues.
The member has made an important point, so can we expect the Conservatives to take some responsibility for having better targeted investments and assessing where we need to make them, or will we continue to hear merely arithmetic comparisons from them?
I am sorry if that is the impression that has been given, but it is not correct. We have tried to make positive contributions on higher education since the Parliament opened. I know that my colleagues who participate in the committee's work have done their best to ensure that we have high-quality debate. I congratulate the committee on the quality of its work, which was carried out on a cross-party basis—I have no difficulty with that. If Brian Fitzpatrick has five hours, I can tell him where I would put the money.
The other issue concerning the sustainability of funding is the attraction and retention of high-quality research staff. Various members have commented on the freedom of universities to do their own thing. It was interesting to note that Richard Lochhead's nationalisation model might provide that. I also noted Andrew Welsh's independence model and his view of the good work that goes on in the rest of our union. We should learn from all those models, but I do not think that the state system will work for universities, because the universities have patently said that they do not want that. They want their independence and do not mind being responsive to public demand or listening to the Executive. If they did not, they would not get any support whatever.
That brings me to the subject of deficits. Earlier this year, I asked the minister a question about how many universities were in deficit and I got an answer: nine on current costs and six on long-term costs. The research that I have done in the past week indicates that the situation will be no better at the end of the current period and may be worse. The Government has a responsibility not to say that it is all down to SHEFC. The Government makes the rules for SHEFC, which carries out the will of Government in whatever way it can. That must start from the Parliament and the Executive; the executive agencies do not have the final decision.
I am curious about the contradiction on the part of the Conservatives. On the one hand, everything is to be at the core of the university—Murdo Fraser was, I understand, even talking about scrapping RAEs, which would be an interesting development. On the other hand, they say that the state and the Government have responsibility for setting the guidelines.
It is very simple. Having aspirations for the future is one thing, but we have to deal with the practicalities of the current system, which is what I thought the committee's report was about. Perhaps Mr Hamilton came to the chamber this morning under some illusion. This is not about dealing with the future way out there; it is about what is happening now and how we can maintain what we have.
A lot of good work is going on in universities. We have had a scare recently, and I congratulate tourism and hospitality people in the sector on their work in lobbying to stop the loss that they were going to incur. That loss now turns out to be a 1 per cent decrease, and they see that as a success. If they take a decrease to be a success, we can imagine the dire straits that they would be in, given the costs of laboratory teaching. That also applies to modern languages. Engineering schools, too, are in deep trouble when it comes to attracting the right staff and getting the investment required to do what they want to do. Elaine Thomson referred to that earlier.
This is not a simple, broad-brush exercise. We must carry it out in stages and be focused over time. Many members have made significant contributions to thinking on the subject, but my view, based on the comments that I have heard from across the chamber, is that the current position is not sufficient.
We are beginning to focus on the committee's report as a starting point, but the important thing is what we do with it. How will the Executive respond to the report? Given the way in which the rules operate, we have little option but to plead with the Executive not to pretend to be at arm's length from the funding council, but to enter into proper dialogue with Universities Scotland and to consider what exactly we need to lay down for the future. It is not good enough that politicians are always tempted to go for short-term gain, bearing in mind when the next election will be and whether they have a glossy slogan. [Interruption.] Richard Lochhead should waken up. That has been one of our party's consistent themes in relation to the funding of universities for a long time.
In simple terms, the debate has highlighted a major aspect of how we deal with the education sector, which is vital to the future of Scotland and those who live in it. It is important that lessons are taken away today, that proposals are worked up and negotiated, and that partnerships are formed. At the same time, we need to look forward to future funding packages.
The debate has been interesting. There is probably not much disagreement on this subject. I was particularly intrigued by Murdo Fraser's approach to education, which is fairly closely allied to that of Brian Monteith. I suspect that it is not exactly what we might call mainstream Conservative thinking—I certainly hope that it was not. Murdo Fraser talked about the dead hand of state control. Clearly, we have a worthy successor to Sir Keith Joseph and Margaret Thatcher in our midst. I was also pleased with Brian Fitzpatrick's contribution. I enjoyed his return to his youthful engagement with university education and his frequent youthful endorsement of independence, an idea that, I am glad to say, was also endorsed by David Davidson. Unfortunately, I think that they were talking about independence in the education sector rather than the independence of the country.
The committee report dealt with a wide range of issues, which most members who have spoken have addressed fairly. Marilyn Livingstone highlighted the need for diversity and equality, as well as the need to give departments rated at 3 access to money. We should encourage and recognise spin-offs. There is a need for seedcorn funding to allow the system to develop.
I agree with Kenny MacAskill that the cake is far too small. That is stated in the report. I do not envy Ms Alexander's having to find more funds from a fixed budget. However, if we are to make progress, both in education and in the economy, more funds will be required.
We should recognise that the situation has moved on since SHEFC reported. Following negotiations, Universities Scotland and SHEFC are moving together and will perhaps be able to provide at least a temporary fix to alleviate the damage that SHEFC reported.
I was intrigued that David Mundell gave the Minister for Enterprise and Lifelong Learning a severe dressing down over her approach to the whole question of new developments in information technology. I endorse his comments on the lack of an evidence base with regard to changes in funding. He raised the question of how we increase funding. We heard Conservative members call for the money to come from the private sector—in fact, they said that it had to come from there. Some members even referred to the time when Scottish universities were proudly held up to be much better than Oxford and Cambridge, which were all that England had at the time, on the ground that the funding of Scottish universities was different. In those days, the bulk of funding came from philanthropists or the church. The money from the church was, in essence, public money, not private money.
Could the member clearly define for us the SNP's policy on the funding of commercialisation projects? So far, we have heard nothing about that from his party.
I do not think that this is the occasion to deal with such details; we are discussing the committee report today. However, the SNP will endorse the funding of commercialised activity in the universities.
A series of balances must be struck. SHEFC did not get the balance right. However, no funding formula will arrive at a solution that will be ideal for everyone. We need to make significant progress on a research and development strategy—as recommended in paragraphs 132, 134, 137 and 143 of the committee's report. Perhaps our debate has not focused enough on that. We have talked about whether the money should come from private or public sources, but such arguments will not necessarily advance the cause. We need to ensure that universities recognise the needs of society as a whole. We also need to fit in the Government's science strategy and fit in what we want to do with the economy. That is not to say that we should neglect blue-sky research, although we do not have the right balance there, either.
Funding decisions cannot simply be dependent on the outcome of the RAE. The fundamental problem is that the RAE does not produce a good assessment, because its assessments are weighted too heavily on where funding comes from. The RAE does not simply take into account the amount of material that institutions publish in learned journals; it also takes into account how their research is funded. Money that comes from the funding councils is given greater credence than money that comes from private sources. I point out to Elaine Thomson that the University of Aberdeen's current research into oil and gas is not rated highly by the RAE system because the research is not funded by the scientific research councils. However, the research is funded to a considerable extent by some of the oil companies. Not giving private funding the same weight as public funding is a wrong that must be addressed.
We must strike the right balance and allow the universities the independence to choose. Because the universities receive significant funding from the public sector and should serve the public good, we need to integrate what they are doing with our science strategy and with the economy. We have not got the balance right. I appreciate that the scientific research councils are a reserved matter, but I hope that the Minister for Enterprise and Lifelong Learning will take on board the fact that we need to influence their direction. Perhaps she can respond to that when she makes her reply.
Today, a variety of members have suggested that we focus on certain areas. I suggest that we need to narrow down the areas into which we put our efforts. We have a good scientific and clinical base in our health service, which already does a lot of clinical trials. A major part of our science and technology strategy should be to make significant efforts to develop that base. We ought to focus on a limited number of areas so that we can go forward. I know that pharmaceuticals are a matter reserved to Westminster, but our patent laws are not satisfactory because they do not allow companies enough time to get their money back.
Our research and development base is not well served by the universities' over-reliance on short-term contracts. The minister should focus on that situation, which is something that she can influence.
For the benefit of the Scottish higher education representatives in the public gallery, who perhaps do not attend the Parliament as frequently as some of us, let me start by observing that there has been more consensus today than on perhaps any other occasion that we have debated the Scottish economy or lifelong learning. I hope that that does not induce trepidation. Instead, today's debate should be seen as an opportunity to put higher education at the top of the political agenda.
I very much welcome the Enterprise and Lifelong Learning Committee's report. This morning, I have been struck both by the variety of issues that members have debated and by the persistent sense of consensus about the importance of the sector.
In the run-up to the first Scottish Parliament elections, the debate on higher education was dominated by student finance and support and the rest of the higher education agenda was somewhat crowded out. However, now that fees are gone and a new support package is in place, that has changed. The passion of this morning's speeches has been a testament to how deeply rooted higher education is in the Scottish psyche. That is because higher education touches not only the economic life of the nation, but its social and cultural life. I thank the Enterprise and Lifelong Learning Committee and acknowledge its role in initiating a debate on higher education that goes way beyond student support. I hope that higher education will stay at the top of the Parliament's agenda throughout the rest of the session.
We have heard from members of all parties how important higher education is. Their interest is right and proper because, as was pointed out, higher education is a recipient of major public support. The Scottish Higher Education Funding Council accounts for almost a third of my department's budget. The higher education budget is rising once again in real terms, so it is right that the committee should also take a close interest in SHEFC's work.
The committee's report comes at an ideal time for the Executive's higher education review. That review will start the process of pulling together the various strands of work that many of the stakeholders—including the committee—are doing on the future of higher education. There is much common ground between the committee and the Executive. The Executive will want a chance to reflect further on a number of the detailed points that the committee has made, but I do not anticipate that those considerations will take long. We will make a formal response to the committee within the usual deadline of eight weeks. Today, I take the opportunity to emphasise the areas of agreement and to concentrate on some of the high-level principles that should typify the way forward.
Let me start with teaching. Although funding for teaching is more than double the funding for research, the distribution of research funding has tended to dominate the debate. It is important that we do not lose sight of teaching. The current allocation mechanism for funding teaching is 10 years old and is increasingly unwieldy and complex. Indeed, the funding council itself recognised the need to undertake a review of teaching funding.
The complexity of the subject—a complexity that was recognised by Des McNulty—is such that that review has been going on for several years. Although the council has acted in good faith, it is fair to say that the latter stages of the review could have been handled better. I therefore welcome the constructive work that has been undertaken over recent months with Universities Scotland. I am confident that important lessons have been learned for the future—SHEFC has admitted as much—and I have no doubt that the interest of the committee has been fundamental in contributing to the progress of recent months. For that, I thank the committee.
As Alex Neil and Des McNulty mentioned, the committee has offered its positive support for a number of SHEFC's proposals. In particular, for the first time, a premium has been introduced this year for the recruitment and retention of students from poorer backgrounds, which will create a level playing field. Similarly, SHEFC has made important proposals to provide additional funding to ensure that higher education institutions support disabled students. This year, £1.5 million will go towards that. We also welcome the continuation of the part-time incentive grant, which furthers our agenda of improving access to and widening participation in higher education.
Will the minister share with us her thoughts on the fees-only system, which is designed to improve access but which seems to be damaging certain university departments?
We will write to the convener of the Enterprise and Lifelong Learning Committee about the detailed issues on which agreement has been reached between Universities Scotland and SHEFC. However, I can share with members the principles that have underpinned our thinking.
I agree with the committee that, if we want to have the proper ambition about which Annabel Goldie spoke, we need to move towards establishing a sound evidence base for the allocation of funding to teaching. I also agree that a degree of independence is important in that regard. Des McNulty indicated the complexity of the task; often, sufficient data simply do not exist. However, there is now work in hand to support that. As far back as 1998, higher education institutions were required, as a condition for extra funding, to put in place robust costing and pricing systems. Those systems are now being developed by the transparency and accountability review and they will be subject to independent audit. That work is at a relatively early stage and is subject to on-going refinement and data collection processes. It will require a number of years to mature and bed in. However, it will provide the critical data on key cost drivers and average costs, which can be drawn on as objective, external evidence to underpin future changes to the funding formula.
As Kenny MacAskill said, it is important that we be careful not to reinvent the wheel when putting in place systems to collect the data that we need. The way forward is to use the review of higher education that the Executive has launched to seek further comment, as part of a wide-ranging consideration of the funding of teaching and of the way in which SHEFC operates. Any new consensus on the direction that we want higher education to take will have important implications for the funding system.
Longer-term change to teaching funding will come. I agree with the Enterprise and Lifelong Learning Committee that that needs to be achieved. However, in the short term, real progress has been made, which should not be overlooked. We have an opportunity now to achieve some straightforward simplification and we should take it.
Finance and ideas require business and entrepreneurial expertise to succeed. What new developments does the minister propose to improve Scottish business schools at higher education level, so that they can provide those skills for the future and bring finance and ideas together?
The higher education review that we are conducting will examine the way in which SHEFC operates to encourage businesses to have better links with the university sector in general. I will say more about that in my remarks about research.
One reason why we should move now to simplify in part the teaching funding system is that increasingly in Scotland we have a new landscape. We have new institutions such as the UHI and new collaborations such as the Crichton campus—which was mentioned in the debate—which are legitimately seeking support to move teaching forward.
Like the Enterprise and Lifelong Learning Committee, the Executive believes that we need to ensure we do not generate unnecessary or unmanageable disruption in the sector. I will say more about that when concluding. We agree with the committee that institutions should retain the degree of discretion that they currently enjoy in distributing resources once funding has been allocated to them.
I very much welcome the Enterprise and Lifelong Learning Committee's contribution to the debate on research funding. The committee has rightly recognised that this is a much larger issue than simply the distribution of SHEFC funding or the detail of the existing funding formula. As we have heard time and again today, research underpins our economic future and we owe it to future generations to ensure that we fund research in a way that is in the best interests of all the people of Scotland, both in terms of economic growth and the quality of life.
The committee has drawn attention to weaknesses in the linkage between the way in which we fund most research and the value of that research to our economy. Although there has been some progress in the past year, I agree with the committee that we still need to do much more. However, it is important that in doing so we do not undermine valuable curiosity-driven research, the economic potential and social benefits of which may take some time to be realised. As we have heard in the debate, we also need to accommodate up-and-coming research departments as well as those that are already well-established. As Alex Neil, Annabel Goldie and other have said, we need to be much more creative in our approach to funding commercially useful research if we are to move the whole agenda forward. The RAE system may not be the right vehicle for that and I welcome the review of that system across the UK next year.
Of course, we will not know the results of the RAE until mid-December and at this point I intend to say only that I agree in principle with the committee that we must endeavour to protect valuable, commercially oriented research that fits with our strategic objectives wherever it is carried out. We must also watch how discussion develops in the rest of the UK so that we make decisions that retain our competitive position.
The committee recommended that the Scottish Executive establish a research and development strategy for Scotland. I agree that we need to develop a better consensus on research funding. Indeed, the remit of the new Scottish Science Advisory Committee already embraces that task and I intend to take advice from that body on the matter. We need to get the strategy right in collaboration with the enterprise networks and the newly created Scottish Development International. I note in passing that neither the science strategy nor Scottish Development International were in place when the committee was taking its evidence. That is why I feel duty bound to talk to the Scottish Science Advisory Committee, which will consider the relevant recommendations in the Enterprise and Lifelong Learning Committee's report when it meets for the first time early next year.
The minister has recently been quoted as endorsing a lot of what has happened in Finland. Clearly, Finland has focused its economy and its science strategy in particular areas. Does she agree that there is a need to move the strategy beyond the area of science to ensure that it is relevant to the whole economy? Rather than having a strategy for academic science, one for applied science and one for the economy, we should integrate all the strategies. Does the minister endorse that view?
I endorse it whole-heartedly.
Because we have had such a measured debate today, I would like to take a few minutes to talk about the financial numbers that underpin our commitment to higher education, science and the repositioning of our economic development strategy.
It is true that our research infrastructure suffered a long period of declining spend in the 1980s and 1990s. However, that spend has begun to increase. Scotland punches above its weight in the area of publicly funded research and development.
Are data available that would give us a Scottish gross domestic product comparator with research funding?
Yes, in relation to research and development. We are increasing funding in real terms for higher education by 6 per cent over the parliamentary session. That is important in demonstrating that the Scottish Executive is putting its money where its mouth is.
When I took up my post, I discovered that there was no data collection for science spend in Scotland. We were in danger of producing a science strategy in the absence of data about the spend. We embarked on an exercise that is comparable to one with which members will be familiar: Government expenditure and revenue in Scotland—GERS—which was a creation of a previous Secretary of State for Scotland, Mr Michael Forsyth. Somewhat to my disappointment, the figures on science spend in Scotland have not proved as controversial, but we are now embarking on an exercise to try to refine the figures for science spend in Scotland in much the same way as we refined the GERS data, which took 10 years.
That exercise has established that, in this parliamentary session, the Scottish Executive will spend £1,000 million—£1 billion—on science. It is anticipated that the UK Government will spend less—£700 million—on science in Scotland and that, over the lifetime of the Parliament, science expenditure will increase by 15 per cent in real terms, which is significantly higher than the increase in funding for higher education as a whole. The baseline that we have for tracking science expenditure in Scotland will show whether we are putting our money where our mouth is.
I turn to more general research and development expenditure. As members of the Enterprise and Lifelong Learning Committee know, we are shifting the focus of the economic development strategy that is pursued by the Scottish Enterprise network away from stressing the locational advantages of Scotland for inward investment towards one that is based around skills and research. As part of that exercise, we are working hard to establish research and development expenditure in Scotland.
The most recent edition of the "Scottish Economic Bulletin" contains figures for publicly funded research and development in Scotland and for research funded by business. As Alex Neil pointed out, commercial research and development expenditure in Scottish industry is only 0.5 per cent of gross domestic product. In part, that is because of the industry structure in Scotland, which is one reason why we are driving toward a strategy that is based more on building indigenous capability in Scotland. That is a challenge for Government and business.
One of the key measures will be the arrival of research and development tax credit. There is already a research and development tax credit for small companies and there is currently a UK Government consultation on the introduction of a research and development tax credit for large companies.
As members will know, there has been an increase in the budget for enterprise fellowships, the small firms merit award for research and technology—SMART—scheme, the support for products under research, or SPUR, scheme, the proof of concept scheme and the invest for growth scheme, which is for small companies that want to access regional selective assistance. All of that is designed to create a pipeline of support that will take someone from the undergraduate stage through to full-scale production. That pipeline is now in place.
I recognise the contribution of Scottish higher education and the capacity of our universities to innovate. Higher education is the original creative industry in Scotland. I have no doubt that, in facing up to the challenges that we have heard about in today's debate, we can look to our universities to show the imaginative leadership that the nation hopes they will be able to provide.
When we consider changes in funding regimes, it is important that we do not consider them in isolation. We must consider the impact on institutions as a whole and how the changes will affect the overall ability of principals, courts and senates—even the University of Strathclyde senate—to plan and deliver effectively our higher education system in the future.
For that reason, I will be asking the funding council to reassure me, on behalf of the Executive and the Parliament, that where there are changes, institutions do not face unmanageable turbulence in their funding. I know that the funding council is already committed to examining the full impact of any changes to institutions and any transitional arrangements that might be required.
Teaching and research funding does not lend itself to quick fixes. That is why today's discussion is so important. We are building a cross-party consensus about the importance of Scottish higher education.
The Executive has begun a review of higher education, which was in part stimulated by the important contribution to the debate that the committee's report made. I expect and hope that the committee's lifelong learning inquiry will produce further challenges and insights into the agenda. Like other members, I hope that the report marks not the end of a process, but the first step in a vigorous and inclusive debate about the future of Scotland's higher education system in this century.
I am substituting for Annabel Goldie. That is a source of relief to Annabel and some distress to me. As I am responding on behalf of the Enterprise and Lifelong Learning Committee, I cannot become involved in some of the little political barbs that flew around this morning. That is another source of some regret. For example, it would be most unfortunate if I responded to Duncan Hamilton's unworthy attack on my colleague George Lyon. I, too, noticed George Lyon in the bar the other night. The point is that my esteemed colleague was in the bar, not at the bar.
I observe that Alex Neil, the committee's able convener, lucidly described rampaging through the senate of the University of Strathclyde. I presume that he would now be accompanied by the committee's deputy convener wearing Finnish national dress and a Goldie bunnet.
I will respond to the debate, which has been constructive and cross-party, and to the minister's response to the committee's report. Many members concentrated on the huge amounts of public money that are going into the sector. The figure is £750 million, taken in the round. In comparison, Scottish Enterprise will receive funding of £377 million this year. Given the concerns that Bill Butler and other members talked about, the committee was right to focus on the issue and initiate the inquiry that led to today's debate.
As the committee concluded, the Scottish Higher Education Funding Council should start again on the funding of teaching. Bill Butler used the phrase
"the gravity of members' concerns".
As he and David Mundell said, SHEFC underestimated the difficulty of developing an evidence base. Worse still, it failed to appreciate that any major change in funding allocation required an evidence base. Members concluded that SHEFC should have appreciated that such an evidence base in itself was an appropriate starting point. SHEFC commissioned research. Why that was abandoned was not clear to all members.
Marilyn Livingstone was right to say that SHEFC initiated that work. We understand—as the minister and the committee's convener, Alex Neil, said—that some progress has been made in brokering a deal between the sector and SHEFC. However, as Ken Macintosh and Annabel Goldie said, questions remain about the transparency, independence and objectivity of the process. I am sure that the committee shares the minister's view about avoiding unmanageable disruption. We look forward to seeing how that process develops and to being involved in considering its effectiveness on behalf of the sector, which raised the initial concerns.
Identifying a formula for allocations that is supported by a strong evidence base is the right approach. Many members throughout the chamber made that point. Politicians are too often criticised for decisions or policy approaches that bear no resemblance to the facts. Parliament is considering a budget of £440 million and a distribution formula that must stand up to public scrutiny.
On behalf of the committee, I say that the minister's comments are welcome. The review of higher education is important and must cover the role of SHEFC. If I heard the minister correctly, she is making room not only for general submissions, but for submissions on SHEFC's role. I am sure that colleagues throughout the chamber will want to return to strategic direction issues, which will be picked up in the committee's work on lifelong learning.
Colleagues also raised what might be best described as the curious treatment of the funding for the teaching of medicine. That funding saw an 8.3 per cent rise, whilst other areas saw a fall of 1 per cent. I understand that that point has been well taken by those who have reason to need to take it.
Considerable comment was made by members, including Marilyn Livingstone and Duncan Hamilton, about the importance of the banding system and the reduction in bands from 22 to six, with which the committee agreed. In the absence of a robust methodology, however, the committee came to the view on that issue that it could not reach a considered decision. We look forward to hearing the final deliberations on the issue.
The review that has been advocated by the committee is important. It surely presents an opportunity to reassess the way in which public resources are used to finance higher education teaching and a competitive economy that competes globally in terms of training, skilling and retraining Scots of all ages. That will allow a stronger Scottish economy to be built.
Ken Macintosh described the change from the historic allocation of funding money, which paid too much attention to what had gone before, to a funding strategy that dovetails the higher education approach and the ideas that surround it. The Enterprise and Lifelong Learning Committee will take that issue forward in its work.
During the inquiry, Brian Fitzpatrick rightly highlighted the importance of the independence of those who might have been considered to have an institutional position that precluded a robust examination of the issues. I hope that that important point will be reflected in reviews that are to be undertaken.
Colleagues referred to the lively debate that used to be called—indeed, it might still be called—the arts versus the sciences. The debate is not new, but it is represented in the Enterprise and Lifelong Learning Committee's work. I am sure that the committee will wish to return to that matter.
For many members, research is the more exciting area of the committee's report. Last night, I reread the report. At the time that we took evidence, many committee members commented on the stark comparison between the funding formula for teaching and that for research. The funding formula for allocating teaching funds, by far the largest component of university funding, used a relatively simple formula that lacked robust evidence. Yet the allocation of funding research was subject to a process that includes peer review, using over 600 assessors spread over 65 individual assessment areas.
The committee was clear that research funding is, as Annabel Goldie mentioned, much more than simply the distribution of SHEFC's main research grant. Only one third of the amount comes to universities through that route.
The research assessment exercise provided, and can continue to provide, a sizeable proportion of the overall funds within a UK structure for the allocation of funds. However, as was mentioned by the minister, the transparency review and other considerations will provide the opportunity to examine the dovetail between the economic and social objectives. We need to see how that can be met in Scottish terms.
Alex Neil mentioned the role of the private sector. Other members examined how additional moneys could be introduced. A strong theme of the debate was the ability to grow the moneys that are available for university research funding. We all share that objective. It is incumbent on the committee to look at that issue when the RAE is concluded later in the year. I hope that that will happen and that the minister will have an opportunity to respond more fully to the committee on the detail of its report.
Considerable comment was also made this morning about the new universities in the context of the level 3 funding mechanisms. Andrew Welsh highlighted the significant disadvantages for the new universities. Many colleagues mentioned the University of Abertay Dundee. Much work is to be done on the subject of the new universities. Kenny MacAskill pointed out the relevance of the work that is done in those universities and how important it is for some of them to progress from level 3 to level 4 or level 5 funding.
As suggested this morning, seedcorn finance provides the opportunity for those research areas to be moved from level 3 through into level 4 and level 5. If I heard the minister correctly, she said that she wished to support the up-and-coming as well as the established. That provides a sizeable chunk of support to the general principle of the approach advocated by the committee.
On the research and development strategy, the minister said in her speech that Scotland must derive the greatest possible economic, social and cultural benefits from Scotland's research base. The committee articulated that objective, which is entirely consistent with the research and development strategy that has been advocated in our report. We would all acknowledge that, since we took evidence, and with the launch of the science strategy, the debate has moved on. Just as important is the business transformation work that is going on in Scottish Enterprise. There are developments there, but the committee was strongly of the view that that area could be brought together and co-ordinated. I welcome the work that the minister will instigate in asking the science advisory committee to consider that recommendation.
Considerable attention has been paid this morning to commercialisation and the importance of the ability of business people to access our universities to find the right connections to build mutually advantageous goals, ideas and projects, and to obtain and use the technology. A theme mentioned by many was the links and support between business and academia. Equally important is the work that needs to be done with small and medium-sized businesses, which are extremely important and were mentioned by many colleagues.
In research spending, the developing policy must balance the need to be globally competitive—for Scottish institutions to attract research stars—with cross-party agreement and the understandable and immediate desire for more spin-offs, commercialisation and work in that area. That can lead and charge the economic objectives that many of us share. Parliament needs to recognise the challenge that is emerging from work by the Enterprise and Lifelong Learning Committee on what needs to happen in our primary and secondary schools to encourage more young people to do science and maths and then a degree in those subjects.
As colleagues have mentioned, the committee believes that SHEFC mishandled the teaching review. The issues have moved on, and the committee has advocated change and made a series of recommendations. Changes have come to pass since—that is welcome. On behalf of the committee, I welcome the minister's response to our report. She has taken the report seriously and, if I followed her correctly, has endorsed many of its recommendations. I look forward to a detailed response in due course. The issues are too important to Scotland's future to get them wrong. It is the responsibility of the committee, working with the minister and SHEFC, to get them right.