Hansard

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.