"The scale of the Government's ambitions for what our department needs to achieve have been clear from the very first day of our existence," Ian Watmore, chief civil servant at the Department for Innovation, Universities and Skills, says in a report assessing DIUS's first year.

No less than the nation's economic prosperity and social justice are at stake, it says. And from the department's title, there is no mistaking the Government's belief that universities have a central role to play in achieving this.

The establishment of DIUS just over a year ago fulfils a recommendation, laid down as long ago as 1963 in the Robbins report, that oversight of science and universities should be brought together in government, explained Sir David Watson, professor of higher education management at the Institute of Education. "That part of the equation seems to be working well, with progress on the science and innovation strategy, and evolving long-term aims for the role of higher education in knowledge exchange and economic development."

Even David Willetts, Conservative Shadow Secretary for Innovation, Universities and Skills, conceded that he could "see the logic" behind the department's creation.

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And Phil Willis, Liberal Democrat chairman of the Select Committee on Innovation, Universities, Science and Skills, believed that Secretary of State John Denham made a "valiant effort" to make DIUS "coherent".

"The most positive aspect of the first DIUS year has been the commitment of John Denham to win recognition for his new department - he and his ministers deserve serious praise," Mr Willis said.

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The sector has been quick to welcome the new voice for universities at the Cabinet table. "It is enormously good for universities to have a Secretary of State batting for them," said Steve Smith, vice-chancellor of the University of Exeter. But he added that the good side was also the downside. "We have a very high-quality Secretary of State responsible for universities - therefore he is going to look at them."

According to some, a new department focused on the sector, with five ministers, has resulted in "initiative-itis", while others feel there is greater intervention. Mr Willetts claimed that universities initially thought they had "found their place in the sun", but had since discovered that ministers "can't resist tinkering with things".

According to Leni Oglesby, secretary of the Universities Association for Lifelong Learning, there appears to be increasing government interference in Higher Education Funding Council for England operations.

"Previously, the department's annual letters of guidance to Hefce confined themselves to a statement of strategic objectives and a steer on priorities. The last annual letter went into great detail about what Hefce was to do and how it was to do it - it was teetering perilously on the verge of micromanagement," she said.

A major stumbling block

One vice-chancellor, who did not want to be identified, said: "DIUS is notably more dirigiste than the Department for Education and Skills, which makes one wonder about the future role of Hefce." He also feared that the department's focus on the nation's skills, and scientific novation, came at a price, saying: "The side-effects are forgetting that science includes - or should include - social sciences and humanities and a greater stress on the instrumental value of higher education."

One year on, there is still concern that the creation of two education departments - with DIUS working alongside a separate Department for Children, Schools and Families - instead of one has left gaps that have yet to be bridged. Professor Smith said: "I'm centrally involved in the links with schools and universities and, with all the best will in the world, there is just a bit more co-ordination to do."

Mr Willetts claimed Mr Denham and Schools Secretary Ed Balls "do not get on". "I hear quite a few reports of the difficulty of getting the two of them in the same room together," he told Times Higher Education. "I think perhaps John Denham and Ed Balls should go to marriage guidance."

Mr Willis said: "The split (between schools and) higher education and adult skills has been a major stumbling block.

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"At a time when DIUS should be directly influencing the school system over the supply of (science and technology) students and increasing participation in universities from under-represented groups it appears to be a passive bystander."

When it comes to individual policies that have emanated from DIUS in its first year, there are no prizes for guessing the least popular. The Government's decision to cut ?100 million from students studying for second degrees, or equivalent or lower-level qualifications (ELQs), was "the most widely condemned government education policy of the last ten years," according to Sally Hunt, general secretary of the University and College Union.

Organisations from the Confederation of British Industry and Microsoft to trade unions and the National Union of Students were united in their criticism of the move, which attracted a petition of 22,385 signatures. Universities were angry at the financial blow, and the fact that they were not consulted on the policy, only its implementation.

"The most depressing and worrying aspect of the furore over ELQs has been to witness the sheer bull-headed intransigence of the approach, with a blatant disregard for the sector's advice ... ", said Professor Oglesby. "Clearly one would support the principle of first-time higher education applicants being given every chance - but why did it have to be at the expense of the reskilling agenda? England's economy needs both."

Professor Smith agreed that the policy was not handled in the best way, but said he believed "there were savings that had to be made." He said that Mr Denham is at pains to point out "at every meeting I'm at" that "he really does want to work with the sector" and not "do things to it".

"A ministry being born anew, so to speak, needing urgently to make cutbacks to fit in with Comprehensive Spending Review - I think actually it has come through and had rather a good year," Professor Smith concluded.

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The year has also seen the publication of several key reports, including the Sainsbury review and Innovation Nation White Paper, which placed innovation - tied closely to university talent and research - at the heart of government strategies to ensure the economy stayed competitive.

DIUS also published its response to Lord Leitch's review on skills, and launched a new higher-level skills strategy, adopting a target for more than 40 per cent of the working-age population to hold degree-level skills by 2020. As part of this drive, the department wants universities to significantly grow the number of places co-funded by employers to 20,000 by 2010-11.

Some, such as Alice Hynes, chief executive of GuildHE, are optimistic that more employers can be persuaded to pay for higher education courses. She said: "I would support the viewpoint that there is actually quite a lot of spend out there - and it would have a big impact if universities got even a tiny slice of that market share."

Others are sceptical, such as Mr Willis, who said: "The belief that somehow, after three centuries, employers are going to come forward with bags of cash to fund students in higher education is fanciful at best and delusional at worst."

Classic case of memory deficit

Other key announcements included: the University Challenge initiative to develop new university centres in 20 towns and cities; a new student funding package to allow a third of eligible students to receive a full grant; and a "student listening programme" to amplify the student voice in Government.

The department revised guidance on preventing violent extremism in universities, and announced a match-funding scheme of ?200 million to encourage universities to boost their fundraising. However, it remained studiously silent on next year's review of student tuition fees, instead choosing to launch a series of reviews that will be used to produce a 10 to 15-year plan for the sector.

The IoE's Sir David Watson said many of the department's policies were proving to be complex, adding: "The ELQ initiative is a classic case of 'policy memory deficit'; employer co-funding will be harder to achieve than anticipated; new 'university centres' may raise expectations beyond what can be delivered in several communities; the 'outside-in' interventions on dealing with extremism on campus have a hectoring quality that can be counterproductive; and all across Whitehall expectations are being lowered about the impact of the upcoming review of variable fees."

Mr Willetts claimed that Mr Denham's record showed he had managed public expenditure badly. He said: "First of all he spent ?400 million on increasing the maintenance grants going up the income scale, and then he has had to recoup ?100 million from second-time-round learners."

The department won praise for prioritising widening participation. Some claimed to detect a shift in focus on this issue, with an increased emphasis on the need to improve attainment in schools.

"One of the good features of splitting the department is that universities and the further education sector are much more open now about the need for reform in schools," said Mr Willetts. "The frustration universities feel about endlessly being made the whipping dogs - I think they feel more able to make that point now it is not in the same department."

Ms Hunt said: "Widening participation is a key priority for DIUS, but increasing the proportion of non-traditional students in higher education has proved difficult. We still feel that the punitive funding regime is the main barrier to participation for students. Ministers need to acknowledge this, especially ahead of next year's review of higher education funding."

The sector hopes Mr Denham's consultation on the future of HE will be a genuine listening process. Sir David said: "His engagement with the sector has been welcomed, although his 'consultation' smacks of previous attempts by new incumbents to buy time - Gillian Shephard did the same thing, as did Charles Clarke. After nearly 12 years in office, a confident Government would know some of the directions it wishes to pursue."

rebecca.attwood@tsleducation.com

BEHIND THE SCENES: THE FIVE KEY DIRECTORS-GENERAL

Ruth Thompson
Higher Education

Responsible for direction of policy and support for students and employers as customers of higher education and higher education institutions. Ms Thompson directs policy on student finance and EU and international higher education issues. Her key functions include the sponsorship of the Higher Education Funding Council for England and Student Loans Company.

David Evans
Innovation

Responsible for the promotion of technology and innovation across UK business.

Alun Evans
Science and Research

Key duties include the maximisation of value for Britain from the science budget, and the development and co-ordination of UK space policy.

John Beddington
Government Office for Science

Duties include enhancing strategic policymaking, through the Government's Foresight Programme. He directs European and international science policy and helps encourage the improved use of science in government.

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Stephen Marston
Further Education and Skills

Responsible for strategy, sponsorship and funding for the FE sector, as well as raising standards, quality and capacity in the learning and skills sector. Key functions also include developing the Government's skills agenda, including the Leitch review, and ensuring employers are involved in design and delivery of adult training.