By Aisha Labi

Universities in Britain are at a turning point, with higher education facing the most severe cuts in public financing in years, and an independent review led by former BP chief executive Lord John Browne due to deliver its recommendations later this year for how the sector should be financed.

David Willetts, the Conservative minister of state for Universities and Science in the new coalition government, has already courted controversy in his brief time in the job by suggesting that university tuition should increase and, just last week, by granting degree-awarding power to the country's first for-profit university college. He spoke to The Chronicle shortly after returning from India, where he led a delegation of university vice chancellors and business leaders in discussions with Indian institutions and educational leaders. He is planning a trip next month to visit universities in California and the Boston area to see how progression from the community-college level works in California's state system and to learn more about links between universities, research, and business in places like Silicon Valley and Boston's biotechnology cluster.

Q: How can higher education in Britain continue to maintain quality with the deep cuts that have been made and those that lie ahead?

A: We do, indeed, face a very tough fiscal position, and Lord Browne's review of the funding of higher education is aimed at achieving a multiple set of objectives. First of all, we want to put the funding of British higher-education institutions on a stable long-term basis.

Secondly, we want to sharpen incentives for universities to focus on teaching. We're very aware that they have very sharp incentives on research, but nothing so strong on the teaching side, and that's an issue with our students.

And thirdly, we want to have a funding model that enables us to contribute to improving the public finances, by holding down or reducing the burden on the public finances.

Graduates do benefit from going to university—there's clear evidence that they continue to enjoy a premium in their earnings—but we can't expect people to pay out of their incomes when they're students, so we're looking at new kinds of graduate-contribution schemes that insure a contribution to the cost of higher education after someone has enjoyed the benefits.

Q: So you would be looking to put more of the burden of financing universities directly on students?

A: [No.] The key aim is when people are prosperous, and if they're in well-paid jobs as graduates, we're interested in ways that they can contribute more.

But we don't see it as a zero-sum game. I think that the only way that would be acceptable to students is if they felt that there was a renewed focus on the academic experience at university. So students have to feel they're getting a more intense academic experience in return for expecting whatever kind of graduate contribution they subsequently pay.

And for universities, they might also be able to reach other kinds of funding arrangements, working more closely with business, doing better at selling services to business, and learning from some of the American success in endowments, and funding from alumni in ways that aren't an explicitly legal graduate tax

Q: You've said that the current financing model, which caps tuition at just over £3,000 a year for British undergraduates and was introduced in 2004, "has turned out to be surprisingly inflexible." How can it be ensured that whatever is introduced this time around remains flexible?

A: That's what Lord Browne's review is all about. Lord Browne's review was actually set up by the previous government. We are hoping that it will come up with proposals that will command widespread consent. The system we've got has weak incentives to focus on teaching, and because of the way in which the system works, you increase the subsidized loans to pay the fees, which means that your market system comes with high public expenditure costs upfront, and that's another issue that's quite tricky to handle.

We're all waiting to see what Lord Browne proposes. Everybody has encouraged him not to be incremental. It's very important that Lord Browne's review looks at all the options.

Q: Is the U.S. system a model?

A: I don't think any one country is a perfect model. I think something that we do notice in the U.S. is that there is a much stronger culture of the alumni giving back to their college or university, and what you seem to have achieved is this marvelous thing of a very strong informal contract—not one enforced by law, but a clear expectation that if you do well after having benefited from your experiences at an American university, you put some of what you have gained back into that university. That culture is stronger in the U.S. I think if we can copy some of that, we'll be doing well.

Q: The previous Labour government set participation targets for university attendance, but the new government has already backed away from these goals. Why?

A: The previous government did set a specific target of 50 percent of young people going to university—it was supposed to be achieved this year—this was the original target year, when Tony Blair first launched it. In the coalition government, we're very wary of these top-down targets, which we think are rather artificial things. ...

We're also trying to ensure that people are aware of the route to professional success and well-paid jobs through, for example, apprenticeships. The status of apprenticeships depends on them being seen not as a cul-de-sac but as potentially a route into higher education. So we see an intermingling of vocational and academic routes, rather than an artificial 50-percent target and an exclusive A-level university route.

I'm a great fan of the community colleges, and particularly of the American system, which is the model of progression, from a community college perhaps onto university for a two-year course and then perhaps to a more research-intensive university for another two years.

Q: Just last week you conferred degree-granting power on Britain's first for-profit university college. Is this a sign of things to come? Will the advent of more for-profit institutions be one of the ways that the British landscape shifts to ensure more participation?

A: I would be very keen to see greater diversity of [options] in higher education. Britain is, in general, one of the world's most open economies, and there's no reason why higher education should be an exception to that. So if there are organizations that meet the quality standards, that pass all the rigorous requirements for degree-awarding powers, then I do think they would have a strong case for taking that title.

Q: How will Britain's institutions increasingly globalize?

 A: I think that there are ways in which the recognition of qualifications and degrees that we have in Britain and on the continent of Europe would be worthy of recognition in the U.S. Increasingly, I'm looking for universities to [partner to provide] courses. ...

Q: While in India, you spoke about how you'd like more institutions to have joint-degree programs and that you'd like to see more students participating in these programs, in part, as a way to encourage mobility outside of their own country. How do you see joint-degree programs contributing to this?

A: One of the things that I am disappointed by is the small number of British students doing any part of their studies abroad. There are lots of different ways that you can achieve it, but one way would be a sufficiently strong collaboration between a British higher-education institution or one abroad, in, say India, where people were confident that the maths and IT course that you were doing at a British university meshed with the maths and IT course that you could do at an Indian university. If you're a British student doing a year of a program in India, or vice versa, it would count toward the degree from your home university.

That would be a broadening of the horizons of the individual student—I'm sure it would make them more employable, because so many employers want people who've got an understanding of a different culture. If you can get that level of confidence and collaboration between two higher-education institutions in two different countries, I think we ought to be able to make it happen.

Q: What role would the government play in effecting this?

A: I think where we can play a part is anything that we can do at the national level and with intergovernmental relations to push forward on mutual recognition. But the key driver will be the collaboration between individual universities.