London School of Economics and Politcal Science

Submission to the National Committee of Inquiry into Higher Education (1996)

Sir Ron Dearing

Chairman

National Committee of Enquiry into 14 November 1996

Higher Education,

Newcombe House,

45 Notting Hill Gate

London W11 3JB.

National Committee of Inquiry into Higher Education

With reference to your letter of July 1996, I am pleased to respond to your request for evidence on behalf of the School. In doing so we have kept in mind your preference for selective responses. While we have noted the structure of the questionnaire circulated with your letter, we wish to present a structured and cohesive argument to the Committee of Inquiry touching upon a number of the issues which you raise rather than a series of responses to those issues. Your letter suggests that this would be acceptable.

Diversity of Provision

The School regards the national interest as best being served through the retention of a diverse publicly funded higher education sector. If it is to make an appropriate contribution to the education of British students, it must not be impeded by ill-conceived policies designed to impose uniformity. LSE is one of the small number of UK university institutions of international standing with a strong emphasis on research which serve the national interest in a number of ways. The contributions of this group of Universities include:

  • Offering teaching which reflects the findings of the latest research and provides expertise and transferable intellectual skills of the highest quality. The national interest requires that the School should provide this facility for all those UK students who can benefit from it as well as students from overseas who are able to pay for it.
  • Providing national research bases to underpin public policy research and offer fresh approaches to issues and challenges in a wide range of fields outside the public sector. The country's international competitiveness requires that these national resources are not eroded.
  • Providing benchmarks of comparison for the international quality of the UK Higher Education system. The LSE plays this role for the Social Sciences.
  • Assisting economic development. The School's staff and facilities, for example, the British Library of Political and Economic Science provide readily accessible and much used resources of advice and expertise for national and global private and public enterprises based in London, contributing to the development of business.
  • Promoting British influence overseas. Many alumni rise to positions of power and influence when they return to their own countries. Retaining an affection for the School and the UK, they are in a position to promote standards and ideas in their chosen professions drawn from British practice which benefit the UK's economic and diplomatic interests.
  • As a by product of their activities, generating foreign currency through the recruitment of high quality students from an international market.

We fully acknowledge that other institutions have different and equally valid roles within the system and that arrangements for resourcing them will need to assist each institution to realise its own objectives.

To illustrate the key points made in this submission, the appendices give an indication of trends relating to the LSE during the first half of the 1990's.

Arrangements for future funding I should like to go on to comment on the funding environment which is necessary for the School and similar institutions to maintain their distinctive contribution.

We assume that the overall level of public funding for Higher Education will not increase substantially, if at all, in the medium term. The key issues are therefore:

  • to ensure maximum value for money from a static level of resource to support the functions of a diverse group of institutions,
  • to leave institutions free to raise and spend resources to supplement public provision as they wish.

Our principal concern is with the arrangements for the public funding of the basic research on which the international standing of institutions such as the School is built. The key principle which provides value for money in this area is clearly selectivity. We strongly support the application of a more rigorous selectivity in the funding method for research, since the current arrangements for distributing QR provide aninadequate reward for excellence and threaten the maintenance of international competitiveness.

On the other hand, we accept that the key principle which will provide value for money in teaching is equal funding for similar subject provision across the whole HE sector, provided that institutions are given the freedom to raise and spend supplementary funds to support their teaching.

Institutions such as the School face a major difficulty in that under present arrangements a world class standard of education is being provided for a large group of students, Home/EU undergraduates, for whom it is seriously underfunded. The School effectively relies on cross-subsidisation from the higher levelof fees paid by non-Home/EU students to provide a high quality education for this group. It is committed to continuing to produce leaders and opinion formers of the highest calibre, but the level of cross-subsidisation required to do so is endangering the School's international market position. Accordingly, theSchool would wish to be given the assurance that it would not be penalised if it chose to raise and spend additional funds for teaching Home/EU undergraduates for example through charging fees beyond the statutory minimum. Effectively, we seek no more from a future funding regime for teaching than to be able to compete freely in the UK/EU undergraduate student market and to determinethe numbers and price of such students.

The School would also welcome major reform of maintenance support for Home/EU undergraduates. It shares the view of a number of other constituencies of interest that undergraduate maintenance should be funded by income- contingent loans, preferably provided by the private sector. In the event that some institutions moveto a system of charging fees above the statutory minimum for Home/EU undergraduates, loans might also be extended to cover fees. The freeing of public resources currently spent on student maintenance would also enable them to be applied other priorities within the HE system.

The School wishes to increase the representation of Home/EU taught postgraduates in the student body. The implication of the Harris Review of Postgraduate Education that a cap be placed on the numbers of Home/EU postgraduates solely for planning purposes is therefore viewed with concern. We do however endorse Harris's recommendation that to increase demand and improve access, maintenance support for taught postgraduates be provided in the form of a loan. The School would also urge that consideration be given to extending loans to cover taught postgraduates' course fees.

We are mindful of the greater opportunities for study at the School that might be opened to Home/EU undergraduate students through part-time registration, given that such students are able to support the cost of their studies through employment. We would therefore welcome greater flexibility to plan our part-time undergraduate numbers. This could be achieved by HEFCE expressing the allocation of funded student numbers in terms of FTE's.

We recognise that within a more or less static level of public funding, a significant shift of resources to a particular area of provision will diminish what is available for others. The School would, as in the past, seek to take the initiative in raising supplementary funding to make good public shortfalls in order to maintain its international standing. It would however wish to be assured that it could retain such supplementary funds without prejudice to the public funding it received and apply those funds as it wished. The School would wish in particular to be able to use funds to secure and maintain its human capital to provide for the following:

  • internationally competitive salaries for the retention of research-based academic staff of world class quality,
  • an improved staff:student ratio
  • high quality development opportunities for all staff throughout their careers at the School, particularly in pedagogic and administrative skills
  • occasional teaching given by eminent visiting scholars and leading practitioners to enrich the faculty, and by postgraduates seeking to develop teaching skills as a prelude to an academic career
  • high quality working conditions and support facilities that will enable the School to remain competitive with an international peer group of institutions. In particular it is crucial for the School to be able to offer a range and quality of information technology facilities that will continue to attract the best staff and students on the international market. It is also essential to maintain the world class facilities of the British Library of Political and Economic Science.

There are two points relating to the development of infrastructure which we would wish to commend to the Committee of Inquiry for further consideration:

(i) The extension of VAT relief to the construction of new buildings for educational purposes would facilitate greater investment in the infrastructure and encourage the development of research foundations, widening the funding base for high quality research.

(ii) It has recently come to our attention that the tax regime in parts of Canada permits charitable donations which take effect upon the death of the donor, but offers immediate tax relief to the donor at the point of entering the commitment, i.e. during the donor's lifetime. We are looking further into the point, but such a scheme would represent a very attractive amendment to UK fiscal legislation from which Universities might benefit.

I would be very pleased to develop further any matters referred to in this response should the Committee of Inquiry find it helpful.

Yours sincerely,

A.S.Grabiner,

Vice-Chairman of the Court of Governors