Thank you for giving me the opportunity to offer some closing remarks at what looks to have been a fascinating and wide-ranging conference.

I hope to be able to avoid repeating too much of what has already been said.

I know, for example, that you will have heard a lot about the cuts to HE budgets. I know that you will have been thinking hard about the implications of the new political reality – what the Conservatives have called the ‘age of austerity’.

I know you will have been preoccupied with some major uncertainty too – not least who will be in Government in just a few short weeks – but also what the Browne Review might mean for universities.

We now know there will be a budget the week after next – with the election possibly called the week after that.

We guess there may be another budget fairly close to the election.

We’re also due a Spending Review – although we may not get one this year. That would mean that the comfort of the three year spending horizon, which has helped universities plan more confidently, is not available this year – or perhaps for the next few years.

This is, of course, a sector which is pretty used to dealing with financial constraints. We know about cutting our coat according to our cloth. But it is deeply disappointing – especially given the very positive progress that the sector has begun to make as a result of rising public investment and the introduction of tuition fees for full-time home and EU undergraduate students.

And, what is worse – we have had the feeling that higher education has been cut harder and faster than other sectors. The schools budget got a small increase, while universities were apparently sacrificed.

And this is in the context of competitor nations seeing universities as an excellent vehicle for fiscal stimulus measures. Nicolas Sarkozy has put 11 billion Euros in to his Universities; President Obama has allocated an additional $21 billion to Science Research.

It is also, of course, in the context of unprecedented demand for higher education from students – a substantial number of whom we could not accommodate this year. There will be even fewer places next year – perhaps as many as 6,000 fewer places for new entrants.

All of this surely tempts us to ask “what just happened?”

What just happened?

In the last decade we have achieved a widespread political recognition of the importance of higher education to the UK. This has been accompanied by unprecedented political backing. Let us not forget that the introduction of fees was nearly a resigning issue for Blair  - one of very few issues (fox-hunting and Iraq being the other two) which really shook the substantial Labour majority.

But it wasn’t just through the introduction of fees that the Government has demonstrated its commitment to, and belief in what we do. Steady growth in investment for teaching, and even more dramatic increases in funding for research, which has broadly doubled – and been ring-fenced within Government budgets.

This was achieved partly because we were able to produce the evidence to convince Government that higher education is a worthwhile investment, and not a cost. I think Universities UK has made a genuine contribution to this, for example through our evidence of the economic impact of universities, which shows that the sector currently generates about £59 billion through direct and secondary effects, generates about 2.6% of UK jobs, and earns about £5.3 billion in exports.

All of this is without counting the value created by the graduates we educate, the ideas we produce or, for example, the contribution universities make to the health of the nation.

But we’ve also been able to show that the Government makes a pretty healthy return on its investment in undergraduate education – about 11% if you calculate the higher taxes paid by graduates associated with their earnings premium. Better than a bank, you might say.

We have also, as a sector, been able to produce some compelling evidence of the financial health of the sector, and how that relates to student’s experiences. Universities UK’s Spending Review submissions in 2001, 2004 and 2007 really explained the consequences of two decades of underfunding. The 2008 report by the Financial Sustainability Strategy Group linked this financial position to pressures on what universities are able to offer students – in terms of accessibility of staff to students; physical infrastructure for teaching and learning; and student support services.

But we have also had some serious help - Lord Sainsbury should be canonised for the contribution he has made to advancing the interests of research in Government. But Richard Lambert has also had a profound influence, both in producing his report on university business links, and in helping to steer the CBI towards is current very constructive engagement with the higher education sector.

But now we’re facing serious cuts.

It is to be expected that HE will have to take a share of cuts ever part of the public sector will feel – but have we been hit harder and faster than everyone else? Has the view in Government changed? Does the idea that universities are central to economic success have less currency in BIS or Number 10 than it used to? Do Ministers think that universities are bloated or insufficiently focussed and businesslike?

I don’t think the evidence supports this. But if any of these perceptions exist, we need to think about why that is; and what if anything we can do about it.

But we also have to face the reality of a decade of shrinking public funding, with the Institute for Fiscal Studies suggesting no real terms increase in public expenditure until 2018. We’re not going to give up on arguing for additional public investment – but the game we are in is mitigating cuts, not preventing them altogether.

AND, with less cash to splash, how will Government get what it wants from HE? We know Government is going to continue to want to pull levers – we’re already seeing this in Higher Ambitions  where, deprived of the option of creating funded initiatives to incentivise changed behaviour in universities, we are offered the prospect of a redistribution of existing resources to align public spending with political priorities. How are we going to respond to this?

I want to focus less on bewailing the loss of public funding and more on how we can brace ourselves not only to survive, but to thrive in these new circumstances.

Clearly we have to look to our own resources, adjust to the new economic circumstances and work out how the sector can take control of its destiny. This is the responsibility of autonomous universities.

Political environment

Nevertheless we have a serious job to do to shore up support for public investment in higher education.

That means strengthening and augmenting our evidence base.

We have a fantastic story to tell – but how many people beyond a small circle in Westminster and Whitehall know about it?  How many know what universities do in terms of transforming individual life chances; contributing to the health of the nation; contributing to national debates; supporting local and regional economies and a range of communities? Come to that, how many actually even know the difference between HE and FE?

This is why UUK is launching an initiative to explain the value of the higher education sector to the wider public with a ‘higher education week’ in June. We don’t aim for overnight success. It’s a long game. But we hope to contribute towards broader public support for universities.

All of this is important because we are going to have to work harder than ever for the political support we have enjoyed in the last decade. The current Government has been saying for many months that we should look to alternative sources of income but we have to acknowledge that although only about 60% of funding to higher education comes from Government sources, this is not income we could easily replace, especially in the short term.

Budget 2010

That’s why we are calling on the Government to announce, in the Budget expected in the next couple of weeks, that they will stand by universities – expecting us to take no more than a proportional share of the cuts to public services. In fact we believe we have already taken that share in the more £1 billion cuts announced over the course of last year, including nearly half a billion from this year’s HEFCE budget, and a further £600 million to come from teaching, research and student support budgets by 2013.

We also call on the Government to do more to meet the rising student demand for places in HE – especially given the effort we have all put in to encourage students, particularly those from low-participation backgrounds – to apply. We want the Government to commit to providing 10,000 fully-funded additional student places in 2010/11 – in part to make up for the approximately 6,000 fewer places for new entrants this year. But please note that promises to create fully funded places must be matched by actions. Last year's promise that the additional 10,000 students would have their student support costs fully funded was not kept: the costs came from the HEFCE budget, and thus from universities,

We know there are difficult decisions to make about how to fund increasing participation. We have been clear that additional places must not be provided at the expense of quality – that is why they must be fully funded – but we are willing to work with the Browne Review, to establish a more sustainable model for growth in the sector.

We’re also asking Government to recognise the importance of our universities to the UK’s ‘soft power’.

Miles Templeman put it very well speaking at a UUK conference last week – he said that when he goes to China to meet Chinese political and business leaders, not only do they all speak English, a large proportion of them have been educated in England. They share something, he says, of the British sense of humour. They tend to have fond associations based on their time studying here - as well as a valued qualification from a UK university that has equipped them for successful working lives. That creates a valuable bond. I doubt you could put a price on that.

So when I look around the campus at Exeter, or many other universities, and see people from all corners of the world, I wonder how many future leaders we have the privilege of educating – and it is a privilege to welcome these highly talented people  to our universities. They didn’t have to choose the UK!

And in what people are calling the ‘Asian Century’ our strong partnerships with India and China – not only in attracting students from those countries, but in playing a role in helping to strengthen, complement and build capacity in their own growing HE systems, is a massive asset.

But there are also significant challenges – not only in terms of international student recruitment, but also in terms of our standing amongst the universities of the world. Consider the fact that India’s target is to have 70 million students by 2020. They will need hundreds of new universities to achieve that. China now has the largest higher education system in the world with over 2000 universities and it has tripled its investment in higher education as a proportion of GDP in the space of a decade. 

I want the Government to do two things in particular to help us in the international sphere:

• First: Co-ordinate support and recognition of the success of UK HE internationalisation by helping UK universities to operate overseas. UK Trade and Investment could do more, including through legal and risk advice, and the provision of financial assurance for overseas activities;
• Second: Stability in terms of visa provision – robust, yes – but proportionate and consistent. We support the direction being taken by the UK Borders Agency and their drive to remove poor quality and bogus operators. This will benefit the UK. But UKBA's implementation and operation of the system has been, and continues to be, problematic for both international staff and students seeking to work and study in the UK. There is inconsistency, delays, constant change and poor customer service. This must improve otherwise we will lose highly talented staff and students frustrated and inconvenienced by bureaucracy.

I want the sector to re-focus its international activity from a focus on recruitment to a focus on partnership; building sustainable linkages with the other leading knowledge economies of the world.

Taking control of the agenda

But we are not just delivering Government a list of problems – passively expecting Ministers and the Funding Council to meet a shopping list of demands. We know there are some very difficult questions, and the sector has to show some leadership in addressing them. Universities UK is already playing an important role in contributing to the Browne Review: working through some very difficult issues in relation to funding and regulation, how we support students and what the relationship between full and part-time study should be. We’re taking a lead, with partners, on the future of quality assurance and demonstrating commitment and leadership on environmental sustainability.

Potentially, a new Government may have some very different ideas about what the Higher Education Sector should be configured to achieve – and unless we want to see Governments of whatever colour shaping the future sector, we need to get better at articulating what we believe it should look like – including the degree of differentiation between institutions.

We have to act together to decide what should happen when individual universities are at risk of failure. How can the sector collectively help to protect the interests of students, graduates and the state?

I have spoken on many occasions about the sector we have in the UK. What I see is a diversity of excellence.

But there are those who would like to see rigid demarcations between the missions of different institutions. The fault-line appears most commonly in relation to research – with some arguing that we should restrict research, for example, to a small subset of universities. We have to be clear about the difference between universities, and the many other providers of education – and explain our value better. This includes being clear about our vision of the relationship we believe should exist between the further and higher education sectors – an important collaborative relationship - but, I believe, with different roles to play.

Outward facing sector

It is pretty clear from international evidence that autonomy correlates highly with success in higher education systems. We’re proud of saying that the UK is a world-leader in teaching, research and knowledge exchange but we face increasing competition from other countries who are learning from our success and innovating in their own ways.

I want to suggest that we need to think differently about learning from our competitors- not clinging grimly to historical advantage, but learning more from what other systems  do well, and taking advantage of opportunities for collaboration. Actually we already see this happening to an extraordinary extent – not just in Asian countries – but also in partnerships for development in Africa and other parts of the world.

Today sees the launch of the European Higher Education Area. David Lammy is signing the declaration almost as I speak, alongside Professor Colin Riordan who is representing Universities UK. It marks the culmination of 10 years’ work in the Bologna Process: an unprecedented achievement involving the constructive engagement and collective decision making of 46 participating countries.

We can be proud of our role as one of the original partners. And we can be proud of the way that the sector, its agencies, the NUS and Government have worked collaboratively to implement the aims of Bologna – enhancing student and staff mobility across Europe enabling the comprehension and comparison of degrees; enhancing the student experience and promoting the attractiveness of European Higher Education worldwide.

To celebrate this 10 year milestone, I am pleased today to announce the launch of the Europe Unit publication: ‘The European Higher Education Area: celebrating 10 years of UK engagement’

You can’t miss it – it’s certainly bright – and copies are available at the Universities UK stand. Please do pick one up.

Of course, Bologna doesn’t end with the 2010 summit. The UK has led and steered the policy debates in many of the priority areas in the Bologna Process – including quality assurance, qualifications frameworks, joint degrees, and internationalisation of curricula and campuses.

But today, more than ever, as the European Higher Education Area is realised, our engagement with Europe must continue to be strengthened and deepened. We should learn from our European counterparts who are marketing their institutions and their national higher education systems as Bologna compatible.  We have much to gain from continuing to engage in the next ten years of the Bologna Process as embeds its principles in the European Higher Education Area. 

What do we want?

The next decade can’t be about business as usual. We have to take on some difficult issues –spelt out with admirable clarity by Alan Langlands in his address to UUK members two weeks ago.

He called on the sector to decide how it wants the sector to look and outlined some crunch issues:

• teaching first or research first?
• protect core teaching and research at all costs or accept diminution in core teaching and research to preserve broadening of the mission of higher education?
• protecting the unit funding for teaching even at the expense of the supply of places or protect opportunities for study even at the expense of unit funding?
• industry-funded skills development or public subsidy for skills?

Actually deciding what we think is really important could strengthen the sector. And a focus on opportunities for collaboration, shared services and even mergers could, as long as it is driven by institutional interests, pay dividends in strengthening us to face international competition.

I am not suggesting there is a lot of fat in the system – the Government might believe there is but after two decades of sustained cuts, with sector-wide deficits recorded via TRAC I think the evidence is against it. 

But perhaps, as a sector, we have tried to chase too many objectives. There may be something to be gained by focusing on what we really mean to do well.

Above all – when it comes to teaching we have to put the interests of students first. Yes, we are going to have to think about the funding and student finance regime – unsustainable in its current form, and not targeted as well as it could be  - but the aim must be to protect and build on the world-class student experience we are currently proud to offer.

Making it Count – Universities UK’s publication documenting how universities have used the income from fees – showed what universities have done with additional income. It’s a great story – with investment in teaching and learning, student services, financial support and the staff who underpin all we do.

We’d like to keep up that momentum.

In the current funding context we simply cannot do that by relying on public funding.  And we will have to focus and prioritise more ruthlessly than we have had to do in the last few years.  That means taking a lead on seeing where efficiencies can be made in the back-office functions of universities, for which we will need significant changes in the VAT regime.

This is a confident, diverse sector. I’ve argued before that universities are a bridge the successful future we would all like to see the UK enjoy. To stretch the metaphor, Government doesn’t build that bridge. We do.  Have we become too dependent on Government architects showing us how it should be done? Probably. Is that the future for the sector in a period in which Government provides a decreasing share of our income? Probably not.

That’s the real meaning of autonomy and we have to exercise that autonomy responsibly.

Finally, note that we also have to win the public debate over the role and value of Universities.  To be honest, we’ve not won that yet.  We’ve probably been too rational, stressing our educational mission and our financial contribution to the UK Economy.   But now I think we need to stress our role as one of the UK’s greatest assets.  HE is a world class sector, of an economy where other examples are not too numerous.  UK is both one of our greatest strengths in ensuring that the UK is a leading world power in the future and also the absolutely essential pull to future social cohesion, future social mobility and future economic prosperity.  I passionately believe that we have a major role in building that bridge to our future.  That means accepting our fair share cuts, but equally it means fighting for the future funding of Universities and students; nothing less than the future of our country depends upon it.  UUK will lead that fight and I commit myself to it.