(21 September 2009)

The CBI's latest report claims that business must do more to maintain the UK Higher Education (HE) system that is facing tough choices posed by recession and competition from abroad. The report also says that the rapid rise in student numbers, coupled with a severe strain on public finances, makes current public funding levels unsustainable. Among the reccomendations are a drop in the number of students, an increase in tuition fees which should be met by students via tuition fee loans and an emphasis on science and maths based courses. The National Union of Students (NUS) called the suggestions "offensive".

The CBI Higher Education Task Force's report, Stronger together – businesses and universities in turbulent times, highlights the vital contribution that excellence in higher education makes to business competitiveness and argues that: "new thinking is required on the financing, structure and mission of our universities if they are to sustain and strengthen their position in a rapidly changing environment". This means that government, universities and students, as well as business, will have to do more if they are to maintain the strength and the quality of HE in the UK.

The UK's HE sector is one of the most successful in the world, and the report acknowledges that universities are a "vital public good". Business needs excellent universities to produce the graduates, postgraduates, research and innovation that are required to drive economic growth and prosperity.

The UK compares quite favourably with similar countries on how many young people go to university, and undergraduate numbers have risen by 35 per cent since 1997. However, the proportion of UK graduates taking science, technology, engineering and maths (STEM) degrees has declined by 20 per cent since 1999-2000, and the CBI wants to see more young people to continue with these subjects after the age of 16.

The report proposes that more businesses should work with universities to:

• Sponsor students studying subjects relevant to business, such as science and technology.
• Provide financial support to new graduates, through bonuses when they sign on with the firm.
• Offer more opportunities for internships, placements, work experience or projects.
• View working with universities as part of core innovation activity.

Richard Lambert, CBI Director-General, said: "Business should engage more with universities, both financially and intellectually. More firms should help design and pay for courses for the benefit of the current and future workforce, and more firms should offer students practical work experience.

"In return for this extra investment of time and money, business will want to see more emphasis given to certain subjects, such as science, technology, engineering and maths. Languages are also seen to be important, and the Task Force argues that more should be done to prepare students for the world of work, and teach them the generic skills that will help smooth their pathway into employment."

Higher Education Spending

The expansion of higher education and the state of public finances is putting an increasing strain on resources. The government has already asked universities in England to make savings of £180 million between 2009 and 2011, and many are budgeting for cuts between 10 to 20 per cent. To preserve the quality of university teaching and research, the report warns that if cuts have to be made, they should be focused on what, by international standards, are generous levels of funding for student support and recommends that the government temporarily drops its target of 50 per cent of 18 to 30-year-olds participating in higher education.

Mr Lambert added: "The economic downturn makes cuts to public funding for HE inevitable, so new sources of funding have to be found. Universities and business must work together to preserve the quality of teaching and research, waste in the HE system must be cut, with universities sharing more of their services and consolidating to make efficiencies.

"On funding, our Task Force considered - and rejected - three options open to the government: cutting research funding, slashing teaching budgets and reducing student numbers. Instead, we say that savings should come from the student support system. Of course, it's never easy to ask students to pay more, but the UK's student support is on a par with some of the most generous in the world, and the priority must be to preserve quality as well as assisting those unable to pay to ensure that higher education remains open to all."

The report argues that:

• The government’s target for 50 per cent of 18-30 year-olds to participate in HE should be dropped for the time being. Given financial pressures, the focus should be on quality not quantity. Following the surge in numbers over recent decades, the UK compares pretty well with similar countries and the priority must be on continuing to raise the performance at the school level.
  
  
• Tuition fee loans should be provided at the government’s cost of borrowing. This should be phased in over a three-year period to avoid impacting on current students, and would deliver £1.4 billion savings per year.
  
  
• Maintenance grants should be focused on those most in need, reversing the government’s recent changes and returning support to 2006-7 income thresholds. Research shows the main barrier to university is attainment prior to university and that student applications have not increased as a result of the rise in income thresholds implemented in 2007-8, so it is unlikely this change would have an adverse impact on applications. It will be increasingly important for universities, with the support of business to provide the extra bursaries that will be needed to ensure that higher education remains open to all.
  
  
• An increase in fees appears inevitable. With the forthcoming review of tuition fees, likely to be up and running by the end of the year, the choice is between finding new money to put into the system or seeing student numbers decline. Universities UK has calculated that increasing the cap to £5,000 from 2012 in England would deliver an annual increase in income for universities of £1.25 billion from 2014, without leading to a decline in student demand.

The report contains a number of challenges to the universities. It argues they should focus on their strengths, and become more specialised, but also more productive by sharing more resources. The way teaching is funded also needs to change - to give students more opportunities for work experience during their degree, encourage new and innovative teaching methods and help universities expand numbers for subjects, where there is demand, within overall public funding limits.

Click here for the CBI higher education taskforce report – Stronger together: Business and universities in turbulent times ()

About the CBI

CBI is the UK's leading business organisation, speaking for some 240,000 businesses that together employ around a third of the private sector workforce. With offices across the UK as well as representation in Brussels, Washington, Beijing and Delhi the CBI communicates the British business voice around the world