Strategically important and vulnerablesubjects

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B12/10
Agenda item 13
28 January2010

Issue

  1. This paper provides an update on the Council’s policies towards strategically important and vulnerable subjects (SIVS), including the work of the new SIVS AdvisoryGroup.
  1. We also consider the implications for SIVS policy arising from the Government’s ‘Higher Ambitions’ and ‘New Industry New Jobs’ papers.

Recommendations

  1. The Board is invited to:
  2. note that Lord Sainsbury’s ‘Race to the Top’ asked HEFCE’s SIVS Advisory Group to report annually on the supply of and demand for Science, Technology, Engineering and Mathematics (STEM) subjects, and that the Group has added this to its previous remit to advise HEFCE and government on strategically important and vulnerable subjects.
  3. consider, at Annex A,the conclusions from the Group’s first annual report, and agree that these should be communicated to the Secretary of State.
  4. agree that the Group should work with UKCES to explore how the findings of its first report and the UKCES Skills Audit might inform our response to the request for advice on contestable funding in our grant letter and our policy on strategic subjects.
  5. note that Paper B10/8 on Recurrent Grant for Institutions in 2010/11 proposes that a sum of £10m be earmarked to support institutions moving provision into STEM subjects to meet the growth in demand identified in the Group’s report.
  1. agree that HEFCE should continue to work with employers, Sector Skills Councils and higher education providers to address specific and immediately identifiable skills shortages, and should make co-funded student numbers available for this purpose.

Timing for decisions

  1. Following this meeting we willformally write to the Department for Business Innovation and Skills commending SIVS Advisory Group’s report.

Further information

  1. Available from David Sweeney (0117 9317304, ); Paul Hazell (0117 931 7452, ); or Chris Millward (0117 9317448, ).

Background

  1. While there is a long history of government interest in promoting science and technology, HEFCE’s approach to strategically important and vulnerable subjects derives from an intervention in 2004 by the then Secretary of State for Education and Skills, Charles Clarke. HEFCE was asked in a letter from the Secretary of State to advise on ‘whether there are any higher education subjects or courses that are of national strategic importance, where intervention might be appropriate to enable them to be available...and the types of intervention which it believes could be considered’. The letter included a list of subjects the government considered to be strategically important.
  1. In response to this HEFCE appointed a Board level Advisory Group, chaired by the late Gareth Roberts. The group’s report, published in June 2005, established a policy framework to secure the national interest with regard to strategically important subjects. A key plank of the policy is that the English HE system’s success is founded on the ability of autonomous institutions dynamically to respond to changing circumstances. The report suggests that ‘HEFCE should guard against an overly interventionist role’ and focus on ‘subjects which are both strategically important and vulnerable’. Importantly,government should define strategically important subjects, and HEFCE’s role should be to identify whether they are vulnerable.
  1. Drawing upon the subjects highlighted by the Secretary of State, the Advisory Group identified broad subject areas which should be considered both strategically important and vulnerable, and to which HEFCE’s attention should be focused:
  1. within STEM: chemistry, engineering, mathematics and physics
  2. modern foreign languages and related area studies
  3. quantitative social science (QSS)
  4. land-based studies.
  1. This has provided the basis for a£350m programme of work in SIVS between 2005-06 and 2010-11. Each project within the programme addresses specific aspects of vulnerability in different strategically important subjects. Examples include:
  2. promoting demand and attainment among potential students, for example STEM and QSS demand-raising programmes, and the Routes into Languages programme, which bring universities and schools together to work on demand-raising and curricula activities.
  3. securing the supply of provision, for example through additional funding for very high cost and vulnerable science subjects, and the enhancement of regional and national research capacity in SIVS.
  4. promoting the flow of graduates into employment, for example by supporting the development of new programmes with employers and Sector Skills Councils in specific areas of STEM.
  1. In 2008, the Board endorsed the report of a second SIVS Advisory Group (paper B08/69), chaired by Brian Follett and informed by an evaluation of the programme. This report found HEFCE’s policy and investments in SIVS broadly to be appropriate and recommended that, in light of the actions taken following a review, land-based studies should no longer be considered to be vulnerable. It also recommended that – in line with a request from Lord Sainsbury’s review of science and innovation, ‘the Race to the Top’ –the next SIVS Advisory Group should add to its remit a responsibility to report annually to HEFCE and government on the relationship between the supply of graduates and demand from employers for graduates in STEM subjects.
  1. Chaired by Peter Saraga, a former Director of Philips Research Laboratories and former HEFCE Board member, the new SIVS Advisory Group includes leaders in higher education, business and government. The current membership and Terms of Reference are attached as Annex B. Its first report is informed by a review of the available literature on demand for graduates in specific subjects, specially commissioned research on employer perceptions, and consultation with groups such as the CBI’s Inter Company Academic Relations Group and HEFCE’s Enterprise and Skills Committee. In line with a recommendation in the Follett group’s report, it intends next to report on the list of vulnerable subjects in 2011. Its first report has, therefore, focused on developments since the last SIVS report, an updated analysis of the supply of graduates in SIVS subjects and an initial analysis of evidence on employer demand for STEM graduates.

Recommendation: The Board is invited tonote that Lord Sainsbury’s ‘Race to the Top’ asked HEFCE’s SIVS Advisory Group to report annually on the supply of and demand for Science Engineering Mathematics and Technology (STEM) subjects, and that the Group has added this to its previous remit to advise HEFCE and government on strategically important and vulnerable subjects.

Discussion

  1. The key conclusions from the Saraga Group’s reportare at Annex A(a copy of the full report has previously been circulated to the Board). In summary, the Groupagrees with the position adopted by HEFCE since 2005 thatthe dynamism of the English HE sector is a great strength and the Council should avoid any intervention that would undermine this. Where there are immediate skills shortages, these should be addressed through close working and co-funding between individual and groups of employers and HEIs.
  1. Building on the work of previousSIVS advisory groups, a comprehensive data analysis, summarised in Annex C,findspositive trends in SIVS subjects at undergraduate level: during the last three years, for example, the number of undergraduate Chemistry, Physics and Mathematics students has increased at a greater rate than the average across all subjects and to a level beyond that at the beginning of the decade. These data, the Group believes,reflect positively onHEFCE’spolicy of selective, time limited and evidence based intervention to address specific problems.
  1. The analysis also, however, finds some areas of difficulty. The number of part-time students and the number of SIVS students in post-1992 institutions has declined, which suggests a limit on the diversity, and in some locations the availability, of graduates in these subjects. Numbers of home domicile Engineering students have been declining for some time, albeit with significant variation between sub-disciplines and with the latest UCAS data showing more positive signals for the coming years. As Michael Worton’s recent report demonstrated, numbers in Modern Languages have stabilised, but there is similar variation between sub-disciplines and continued concerns about the viability of provision. The report suggests that these trends should inform HEFCE’s SIVS activity and investments, and that further work should be undertaken to understand the patterns and possible responses to them in Engineering.
  1. Investments made by HEFCE and others have clearly raised aspiration and attainment in STEMsubjects,but the cap on full-time student places risks undermining this progress. In this context, the Group suggests that it will be important for government and HEFCE to establish a means for ensuring that the upturn in student demand in STEM can be accommodated by an increase in provision.
  1. Whilst analysis on the supply side is relatively straightforward,the new remit to understand employer demandfor STEMgraduates has moved proved more complex. The Group approached this by: compiling and synthesising the existing evidence on employer demand; analysing HESA data on salaries and employment; and commissioning research on employers’ views of their requirements for STEM graduates.
  1. This work suggests that demand for STEM can be articulated in terms of broad graduate attributes, individual or groups of subjects, or specific skills acquired within subjects and programmes. These requirements may be associated with graduates in identified subjects or programmes, levels of performance or qualification, or institutions, and they may in some cases reflect the selectivity inherent to higher education admission or aspects of the higher education experience such as work placement and time abroad.
  1. The reportidentifiesnumerous forecastsof the demand for STEM graduates by organisations such as Sector Skills Councils, but it concludes that the landscape is simply too complex and fast moving for shortages in specific sectors or occupations to be translated into numerical changes to the provision in specific subjects. The speculative nature of projections - and the impact of economic, technological, political and behavioural changes - make the alignment of employer demand with supply in higher educationexceptionally difficult.
  1. Notwithstanding this, research commissioned by the Group and others finds that employers consistently value STEM graduates for their numeracy and technical abilities, particularly when these are aligned with the transferable skills they associate with the highest calibre graduates. It is also clear, however, that these graduates will increasingly need to draw on other subjectsto identify and address the challenges of the future.

Recommendation: The Board is invited to consider and endorse, at Annex A,the conclusions from the Group’s first annual report, and agree that these should be communicated to the Secretary of State.

Implications of Higher Ambitions and the HEFCE Grant Letter

  1. The Government’s Higher Ambitions report says that:

‘We will bring together universities, employers, HEFCE and the UK Commission for Employment and Skills (UKCES) to identify and tackle specific areas where university supply is not meeting demand for key skills. There will be a new central role for the UK Commission for Employment and Skills to advise on areas where there is an insufficient supply of graduates in particular disciplines’.

Also that:

‘We will ask HEFCE to make the system for supporting Strategically Important and Vulnerable Subjects (SIVS) more proactive, expanding it to support the kinds of priorities identified in the New Industry, New Jobs (NINJ) strategy paper. This includes areas where there is a major mismatch between supply and demand, and subjects which are not yet vulnerable but are at risk of becoming so. We will monitor the balance between supply and demand in strategically important subjects, to maximise the capacity in the system to provide for qualified applicants’.

  1. The recently published HEFCE grant letter builds upon these statements to say:

‘We still need more skilled people in those industries which have the potential to drive future growth in our economy, such as those highlighted by the CBI, the UKCES and in New Industry, New Jobs. We want higher education capacity to grow in these priority areas, and we look to universities to respond to the national need. Universities already have good links with employers and relevant Sector Skills Councils, and a well-developed capacity to create new courses for their own students and localities. But, as we signalled in Higher Ambitions, I am also asking you, in consultation with all interested parties, to devise new funding incentives for higher education programmes that deliver the higher level skills needed. This will require a robust way of identifying those programmes and activities that make a special contribution to meeting economic and social priorities, and a mechanism to redeploy funds, on a competitive basis, to those institutions that are able and willing to develop new or expanded provision in these key areas. I do not under-estimate the challenge of doing this. Nevertheless we need to make rapid progress in this area. I would like you to report in spring 2010 on the issues and options, and by autumn 2010, I would want you to have a firm timetable for implementation in the academic year 2011/12.’

  1. The CBI’s recent report Standing Together – Businesses and Universities in Turbulent Times identifies an increase in the number and quality of STEM graduates as a priority for business; it also, however, promotes diversity in the HE system and measures to enhance the employability of all graduates. UKCES will publish a Skills Audit at the end of January, which will bring quantitative and qualitative indicators together to identify occupations with skills shortages during the period until 2020. BIS has identified life sciences, creative industries, digital Britain, low carbon industries, advanced manufacturing, professional services, construction and STEM as sectoral priorities arising from NINJ.
  1. These sources provide valuable evidence to inform decisions by universities and colleges as they continually update their provision, and by potential students as they decide what to study. Given that graduates from specific programmes and subjects move into a variety of occupations, however, it will not be straightforward to understand how the occupational shortages identified in the UKCES work and the sectors identified in NINJ should inform our policy towards strategic subjects and our funding of provision in universities and colleges. If there are common themes in the reports produced by CBI, BIS and our own SIVS Advisory Group, these are: firstly, the particular requirement for STEM graduates in the advanced and rapidly changing labour market of the future; secondly, the need for immediately identifiable skills requirements to be addressed through employers and providers working together, with public funding supporting this ata level proportionate to the benefits accruing to the different parties.
  1. The CBI is already represented on the SIVS Advisory Group and we have invited UKCES to join.

Recommendation: In light of the statements in Higher Ambitions and the HEFCE grant letter, the Board is invited to agree that the Group should work with UKCES to explorehow the findings of its first report and the UKCESSkills Audit might inform our response to the request for advice on contestable funding in our grant letter and our policy on strategic subjects.

  1. In the meantime, Paper B10/8 on Recurrent Grant for Institutions in 2010/11 proposes an initial response to the growth in student demand for STEM subjects identified in the Group’s report and its finding that employers consistently value STEM graduates. Taking into account the cap on Additional Student Numbers and the full-time intake, the proposal seeks to support institutions moving provision into STEM subjects, with a view to enhancing the flow of STEM graduates, and sustaining the upturn in aspiration and attainment in this area.

Recommendation: The Board is invited to note that Paper B10/8on Recurrent Grant for Institutions in 2010/11 proposes that a sum of £10m be earmarked to support institutions moving provision into STEM subjects to meet the growth in demand identified in the Group’s report.

  1. Our co-funding of industry-standard Foundation Degrees for the nuclear and chemical industries (developed with Cogent), and similar provision for the IT industry (developed with e-Skills), provides a template for the way in which we can work with employers and providers to address immediate skills needs, and we are currently engaged in discussions with the pharmaceutical industries about similar provision to address their requirement for in-vivo skills.

Recommendation: The Board is also invited to agree that HEFCE should continue to work with employers, Sector Skills Councils and higher education providers to address specific and immediately identifiable skills shortages, and should make co-funded student numbers available for this purpose.

Financial implications

  1. Details of our £350m programme of work to support SIVS during 2005-06 and 2010-11 are available at This figure includes:£96m to mitigate the impact of the ELQ policy on SIVS subjects, and £76m in direct support for STEM such as STEM Centres for Excellence in Teaching and Learning; regional investments, such as the Midlands Physics Alliance; and research capacity investments with Research Councils and industry (such as the Integrative Mammalian Biology Initiative). It alsoincludes the additional £25m per year for high cost and vulnerable science subjects, which will be appraised as part of the next year’s formal review of the teaching funding method. As indicated above, Paper B10/8 proposes a further £10m recurrent investment to address the growth in STEM demand.
  1. Building on our existing demand raising projects with professional assocations, in August 2009 we funded a three year national HE STEM programme. This £20m programme aims to deliver a sustained increase in STEM graduates, and satisfy the need for higher-level skills in these subjects among employers. Following a recommendation in Michael Worton’s review of modern foreign languages (considered in November 2009, paper B09/104) we can expect to consider a £500,000 request from the SDF budget to extend some demand raising projects within the Routes into Languages programme, and potentially a larger request for a second phase of work in this area. Any such requests will be handled through the normal SDF approval process.
  1. As indicated earlier, our efforts to address immediately identifiable skills needs will also require co-funded additional student numbers. We have been in discussion with the ABPI, the pharmaceutical industry’s representative body, about co-funding a small number of Masters programmes that deliver the skills required in this priority sector. This, and other such co-funded developments, will be supported through the budget allocated to our Employer Engagement programme, on which we periodically report to the Board.
  1. We continually stress to stakeholders that additional HEFCE support is not permanent and guaranteed,is dependent on the outcomes of spending reviews,and will continue only when a claim for vulnerability can be backed up by a robust evidence base. The resource implications, in terms of both staff time and programme funding, of continuing an active SIVS programme, areperiodically reviewed and we will consult with the Board if we consider that further resources are required to support our interventions. We will also consult separately with the Board on our response to the skills imperatives identified in the Secretary of State’s grant letter.

Risk implications

  1. We have in place a comprehensive project plan and risk register (available from Paul Hazell or0117 931 7452).
  1. Policy changes rapidly in this area and we are concerned to ensure that our approach towards SIVSremains fit for purpose. We mitigate this by working with key actors in this area, such as UKCES and officials at BIS, to refine and align policy and investments. We are planning to review the list of vulnerable disciplines in 2011, but may return to the Board before then if a significant change of policy is desirable and/or necessary.
  1. An internal audit noted that, with our current resourcing levels, we may be unable to manage a number of high profile events such as high profile department closures or the government designating further subjects strategically important. We mitigate this by calling on flexible internal resource, and by early warning of major strategic changes within institutions. As the fiscal environment tightens we expect to become more involved in managing risk and communications as universities and colleges focus on mission and priorities.
  1. Our policy to date has been predicated on the ability to provide funding and student numbers to address vulnerability: we have, for example, used additional student numbers to transfer provision from one HEI to another where this is sensible; and have used SDF funding to incentivise sustainable partnerships in particular disciplines (for example, the South East Physics Network). As we move into an era of reduced public spending, these options become less open to us and our interventions may become even more selective than currently.

Sector impact assessment

  1. A full Sector Impact Assessment (SIA) wasundertaken in 2008. Project sustainability has been a major consideration in the projects we fund. We intervene only so long as individual subjects are considered vulnerable, and we tailor intervention to the problems we find.
  1. The languages strand of our SIVS work aims to harness linguistic potential in all communities and so contribute to sustainable demand for languages in the longer term. The national project to raise aspiration and demand in science, technology, engineering and mathematics similarly has an emphasis on widening access and workforce development to ensure sustainability in these disciplines. Both initiatives therefore promote equality and diversity.

Public presentation

  1. We intend to submit the SIVS Group’s advice within the next month to the Secretary of State, and then formally launch its report via a press release and HEFCE publication.
  1. There is also a need to address the widespread assumption that HEFCE managesstudent numbers to meet specific workforce needs and can fund specific courses, rather than institutions through a block grant. This will require wider communications work around HEFCE’s funding powers and responsibilities.

Annex A