AHUA Annual Conference—Oxford University
Oxford, 3 April 2006

Let me start by thanking you for the invitation to speak to you today. As the
European Commissioner responsible (amongst other things) for education, it is
crucial for me to exchange with those involved in universities, to get a feel for
what is important to them and how they see the future. This is all the more
important since the political interest in universities and higher education is
clearly growing, and there is an increasing sense within Europe that our
universities are being held back from delivering to society the various benefits
that they could provide. So I am very interested to hear your views on all this.
Let me also say at the very start that the situation in which British universities
find themselves is quite different from that of most of their continental cousins.

This is largely because you have been in a more or less continuous process of
reform since 1992 – and I am sure you are aware of that in ways I cannot even
begin to imagine. But it is also because, historically, the ancient universities in
this country had more independence from the State than was the case in many
continental countries. The model of autonomy was thus already to hand in this
country. When it is seen to have brought success, it is easier to build on it and to
expect that the performance of universities generally will follow the same
successful path.

I propose today to outline for you a European perspective on universities:

• Why we believe that they are so important;
  
• Where European universities generally are not matching up to their
  
• potential;
  and what should be done about it.

In doing this I shall not be arguing that powers need to be transferred to the
European level, or that the Commission should be able to regulate the university
world – far from it. But the Commission not only has an interest in Europe as a
whole; it also has an interest in both the European economy and European
society. I therefore have a perspective which is different from that of national
authorities and, I hope, adds something to their reflections. That is the
perspective I wish to present today.

Why are universities so important?

We can’t answer that question without looking at what is happening to Europe
as a whole, particularly in the areas of education, research and innovation. That
is a big part of the competitivity dimension of our societies and economies – or,
if you like, the “knowledge dimension”.

First, our economies are changing. They are no longer manufacturing economies,
they have become or are becoming transformation and service economies. We
have to hope they are also becoming innovation economies. Let’s see what the
figures tell us.

First, let’s look at the numbers of young people in higher education. That’s a
good proxy for the level of qualification of young people in the labour market.

As you see, We are not doing so well. Most of our main competitors are putting
more young people through higher education than we are. Nor is this new – they
have been doing so for some time.

It is difficult to measure success in knowledge creation, but citation indicators
and peer review tell us something. According to the THES review of universities,
only one European university was in the top 10 for citations last year – and that
was the Federal Technical university in Zurich. Two, Oxford and Cambridge,
were in the top 10 on peer review.

If we look at investment in research within the EU, it doesn’t come out any
better. The US invests far more in research than European countries or the EU as
a whole; you have only to think of the National Institutes of Health with their
$28 billion budget, or the National Science Foundation with another $7 billion.

Only in the United States can the government give a single research contract
worth over $3 billion and, yes, you are right, it was the US Department of
Defence which gave it.

Moreover, when we look at where research investment in the world is going, we
see that other countries, in particular low-cost countries, are doing much better
than us.

The biggest source of private R & D investment is US business, and their R & D
investment in Europe is growing at a small proportion of the speed it is growing
in China and India.

Finally, to complete this somewhat doom-laden picture, we aren’t doing as well
on innovation as we could be either. I won’t go into details here, but I want to
show you the latest version of the “innovation scoreboard” that the Commission
has compiled, based on 26 different sets of indicators. This seeks to show how
innovative the economy in the EU is in comparison with the US and Japan.

Against this background, it is obvious that we need to invest more in our
universities. If Europe is to continue as a successful society and economy, we
need universities which can face the multiple challenges of wide social access,
good regional links and development capacities, the ability to commercialise the
fruits of research, and straightforward academic excellence. These are not all the
same thing – and it may be asking too much from any one university to be good
at all of them. But they are all important.

How do European universities generally match up?

An outsider looking at most of Europe’s universities today – and as I said earlier,
I would generally except UK universities from this part of my remarks – would
be surprised by a number of things.

• First, by the degree of regulation that many universities have to contend with.
  Micro-management is the appropriate term for it – for example, the
  arrangement under which any decision taken by a University rector or
  administration has to be counter-signed by the Ministry before it is effective.
  Imagine the time wasted and the impossibility of management under such
  circumstances.

• Secondly, by the degree to which universities (and the authorities that
  regulate them) seem to think that they should all be the same. The model they
  want to follow is the general, research-intensive university. In short, they are
  all looking to be, let us say, Oxford. Now being Oxford is certainly important – but we also need recognition that other dimensions of university work –
  access or regional development, for example – are crucial for the future of
  society. And I don’t see much of that recognition today.

• Thirdly, when you look at many of our universities, you can see why the
  expression “ivory tower” came about. They are not always well connected to
  the outside world. Not all would accept, for example, the notion that they are
  preparing people for the labour market – and hence that employability is one
  important indicator of success.

• And finally, let me be clear – and here you may think that I should include
  the UK – most universities in Europe are seriously under-funded. This is both
  on research and on education. The US manages to spend in all about twice as
  much as the 25 EU Member States manage on average. And over time, that
  adds up. The higher education spend looks like this.

The figures on research are comparable.

Of course, the picture is not all gloomy. There are many excellent institutions on
the continent of Europe, and many more have excellent departments within them.
My point, however, is that attitudes and regulations prevent them from being
as good as they could be, or doing as much as they could do for society.

What are the reforms we need?

Let me divide this part of my comment into three sections. First, I want to look
at governance; then at curricular reform; and finally at the issue of fragmentation.

1. Governance
   Even in countries where universities are technically independent and
   accountable, it isn’t always like that in reality. Universities are almost totally
   publicly funded; so Ministries keep a detailed control over what they do and
   legal independence is in some countries no more than a fig-leaf.

This is the first thing that has to change if universities are to be enabled to do
more. I do not believe that we shall ever get the best from our universities if
Ministries keep control and spend their time trying to guess better than
academics what is the right area to invest in. There’s no evidence that they do it
better – and considerable evidence that they do it worse.
That means that the funding regime has to change as well – it implies perhaps a
system of block funding, rather than detailed amounts for specific things. It’s
worth reflecting on the fact that in some countries it is impossible to know how
much a university costs – the research money is identifiable, but the staff
salaries come from another budget, building maintenance from a third,
equipment purchase from a fourth and maintenance from a fifth, student support
from a sixth, pension contributions are part of a massive block payment by the
Finance Ministry for all civil servants – and so on.

That sort of arrangement – and I admit that it’s an extreme case – makes the best
use of resources quite impossible.

But the funding regime can only change if universities can persuade society –
and governments – that they are good value for money. They need to be pro
active in marketing their value; and they need objective support in that. Hence
the Europe-wide movement on Quality Assurance. We now have a Europe-wide
agreement on standards and guidelines for Quality Assurance, which emerged
from a working party chaired by the representative of the English Quality
Assurance Agency and was accepted by Ministers responsible for higher
education in Bergen last year.

Similarly, universities need professional management – and they need to
recognise that professional management is essential and should be properly
rewarded (Perhaps I am preaching to the converted here?). The British system
has invested in leadership and management processes and training. I am sure
this has contributed to quality, and I hope it will be possible for others to learn
from your experience.

2.Curricular Reform
The words “Bologna process” seem to bring two reactions in the UK. One is
indifference – ‘we already have the BA/MA/PhD structure – Bologna lets the
others catch up.’ The other reaction is one of caution – ‘will we have to change
our degrees?’

I can’t answer the second. But I want to draw your attention to the Bologna
process because it shows that you can
change things, given the will.

Over the 8 years since the Bologna declaration was signed, more than 40
European countries have converted to the BA/MA/PhD structure. They have
moved from a variety of long degrees, often very dear to their own academic
worlds, to a global standard for university qualifications. This has not been easy – and indeed in some countries it is still controversial (in the student
demonstrations in Paris last weekend you could see a few placards saying
“Down with Bologna!”). But they have moved. They have revisited their
curricula – you can’t just stop a 5-year curriculum after three years and leave the
remaining two for the Masters. They have taken on board Quality Assurance
systems.

A by-product of this – and an important one – is that European higher education
systems are becoming more comprehensible, and therefore more attractive world
wide. That matters, since the flow of foreign students into universities is a major
development factor. Think of what it means to the US that one third of their
engineering PhD students are Chinese. Think of the situation of many British
universities if the numbers of overseas students fell off. Think that in many
European countries now you can take a degree in English even though the
language outside the lecture room may be Swedish, Dutch or Italian. What does
that mean for Europe? And for you?

So, curricular reform is under way. It is one of the most important elements in
university life. If your curricula are modern and up-to-date, you are well placed
in what is increasingly an international higher education market.

Fragmentation
Finally, let me say something about fragmentation. This is inherent to a Europe
made up largely of small countries. They naturally all want their own
universities, they want their own research funding systems, their own controls
and their own cultures. Indeed, their cultures are important, and universities are
often a key player in keeping them vibrant and connected. I don’t want to give
the impression today that I see universities as a purely economic instrument.

But one outcome of this is that the European university system is broken up into
small bits. And with increasing regionalisation in some of our big countries –
Germany and Spain, for example – the tendency is to fragment more, to erect
more barriers, not less. This sits oddly with what all academics regard as the
global nature of knowledge.

This is where scale comes in. If you look at the US, you can calculate that they
have a “world-class, general, research-intensive” university for every 6 million
people or thereabouts. A country like the UK with a big GDP, can achieve a
certain number – I won’t expose myself by suggesting how many – along the
same lines. My own country, Slovakia, with a population of some 5½ million
and still a much lower GDP per head, has to struggle.

We don’t have the
financial resources, even if we do believe that our intellectual resources are
second to none. But what happens to them? They have to go abroad. In that
sense, Slovakia is typical of many European countries. Unable to provide the
quality of research and academic infrastructure that our academics need and
deserve, we see them emigrate. And not enough of them return.

This problem is compounded of course, by the fact that European higher
education systems generally attract next to nothing in terms of private financing:
the funding gap with the USA I mentioned consists almost entirely of private
financing, since levels of public investment are about the same.

What can we do at European level? Well, there are a few answers. We can start
by pressing the Member States – as we do – to introduce the sorts of reform I
have been talking about. To free their universities from unnecessary burdens and
encourage them to play to their strengths.

We can also contribute financially. This is where the European Research
Council comes in. It’s our way of putting money – a lot for us, though not a lot
by US standards – in the hands of excellent teams of scientists, through a neutral
peer-review process with only one objective: quality. I believe this will make a
big difference to the European research scene; and I hope that the excellence
driven process will be emulated in some of our Member States as well.

But given the levels of resource we have available, this will not be enough by
itself. We have to find other ways of using our money more effectively – or of
building up our intellectual capacity so that we can remain present in the
innovation stakes in 10, 20 or 50 years’ time.

This is where the Commission’s proposal for a European Institute of
Technology comes in. Let me briefly explain how we think it would work, and
then try and fit it into the picture I have just outlined.

Early in my speech today I gave a brief sketch of our position on
competitiveness. On a scale of 1 to 10, it’s not good. The Commission believes
that if we are to improve it, we need a way of bringing together universities,
research centres and business around the “knowledge triangle” – education,
research and innovation. One way of promoting this would be to set up an EIT.

The EIT should be an operator – it should do its own teaching, its own research – and in due course, it will develop a portfolio of innovation. It should not be a
new institution built in a green field to compete with existing ones. Instead, it
should be a network organisation, taking in teams from universities, research
centres or businesses – not the whole institution, but the team working on a
particular subject. The subject areas would be identified by a Governing Board
made up of academics and business people, and they would try to select the best
areas for long-term investment – ten or fifteen years ahead – in which they and
industry could invest the best human resources available.

They would aim to build up hubs of intellectual capital – not in the classic
disciplines, but in strategic inter-disciplinary fields: perhaps green energy or bio
informatics, for example. In due course, there would no doubt be industrially
useable outcomes; but the time-scale should be long enough for these to be
reached without the need continuously to review participation, to look for new
sponsorship, to spend precious time and energy on renewing the finance.

Now, why should a proposal like this be controversial – or even interesting?
First, because of the concern that its resources might be drawn from other
research-related funds. But the Commission has made it clear that this would not
be the case, so I discount that issue. We don’t want to undermine the European
Research Council, any more than researchers themselves do.

Secondly, because the format is new. Building business into the management
and operation of education and research is something many find hard to
envisage. But that’s part of why it’s so important. We need a new model – we
need something which can demonstrate to countries where university models
still hark back to the days of von Humboldt, that today there are additional ways
of doing things.

And thirdly, I believe, because of a certain degree of fear. Fear, for example,
that it might drain excellence from existing institutions without giving anything
back. Fear, perhaps, that, since it would be governed on the basis of excellence,
it would not, by definition, be “inclusive”. There are also fears that it would end
up being subject to political interference and that excellence would go out of the
window.

All these reactions to the Commission’s proposal for an EIT are out there. They
all have to be dealt with, and over the next few months, the Commission will try
to deal with them. I am not saying that we have all the right answers or that we
have a magic formula: but I am saying that change is needed and that we believe
there should be a flagship to promote it. We will issue the next formal
communication on the EIT in June, for the next meeting of Prime Ministers. It
will show the concrete steps we intend to take and how we might deal with some
of the particular challenges thrown up by the model we have proposed.

Clearly, the EIT is not the whole answer to Europe’s competitivity problem. But
it is part of the answer. In their own way, the reactions to it are a microcosm of
the problems that universities face.

In the UK you had a major reform 15 years ago, and you have faced up, with
great success, to various other reforms over the subsequent years. I hope that my
successor will be able to say as much of European universities generally in ten
or fifteen years time.

Thank you very much.