The future of university expansion or a false hope? In the first of three articles, Claire Sanders looks at increasing employer involvement in higher education

Employer-led higher education is still an alien concept to many in the academic world.

But ministers are convinced that the development of university courses tailored to meet the demands of training and development in the public and private sectors could fuel the future expansion of universities - potentially generating thousands of jobs and millions of pounds.

It is easy to see why this would be such an alluring proposition for Whitehall officials as they prepare for what is being billed as the most gruelling Comprehensive Spending Review to date.

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Getting universities to meet employers' needs would help to address acute skills shortages in the public sector and industry as a whole.

Jobs are anticipated in the education, health and social care sectors, particularly those areas that cover the care of children where the Government is investing millions of pounds in new qualifications. Police studies is another area of growth.

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In the private sector, growth in the number of jobs will depend more on regional needs, but energy and the environment, biotechnologies, the creative industries and digital media are all predicted to expand over the coming years.

Employer-led initiatives would also enable the higher education sector to expand student numbers - still a government goal.

Finally, they might even help universities to broaden the social mix of people on higher education courses as ministers strive to meet widening participation targets.

These potential Whitehall-wide benefits have led to employer-led higher education racing up the Government's agenda over the past year.

Bill Rammell, the Higher Education Minister, has already said that employer-led higher education is being keenly discussed by his department in the run-up to the spending review.

And he has indicated that it could help in the drive to widen participation.

Early this year, Ruth Kelly, the former Education Secretary, asked the Higher Education Funding Council for England to lead "radical changes in the provision of higher education" through employer-led higher education in the annual grant letter to institutions.

However, many in the academic sector remain sceptical about whether employer-led higher education is the panacea some believe it to be.

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There are fears that private-sector employers, particularly small and medium-sized companies, might be reluctant to help fund new courses and that the Government might be seriously overestimating employer demand and underestimating how much universities already do in this area. Many in universities are also concerned that the Government will use the policy to fund its flagging widening participation initiative on the cheap.

Government strategy

The nature and aims of the Government's policy will become clearer later this month when Hefce publishes its employer engagement strategy.

The focus will be on learning and teaching, rather than on the separate but related activity of technology transfer, according to Sean Mackney, head of learning and teaching at Hefce.

"It will acknowledge the extent of the work already taking place across much of the sector - from the development of foundation degrees to long-established sandwich courses - but it will highlight two key problems," he said.

The first is that no one quite knows the extent of employer demand for further engagement with universities, particularly from small employers.

The second, Mr Mackney said, is that some universities have placed a low priority on workplace learning in the past and there not much of a shared language between employers and higher education.

He added: "There is a cottage-industry feel to this work in some universities. Our aim is to see where it can be developed and extended."

Iain Nixon, co-author of a report on work-based learning for the Higher Education Academy that was published in June, said: "This policy will not work unless there is a demand from employers for higher-level courses.

"The Government clearly wants employers to take on some of the costs associated with these courses, but employers need to see a clear value in terms of staff development."

He added: "Many, particularly small employers, are fearful that they will pay for staff development and then lose staff to competitors."

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He also said that universities needed to be more flexible in meeting the needs of employers - that is, able to set up courses quickly and at times that suit employers - while continuing to guarantee quality.

In April, the funding council called for universities to bid for funds to support pilot projects involving employers. Successful bids are likely to build on the lifelong learning networks currently being set up with local skills councils and regional development agencies to nurture links between further education and higher education.

Hefce is also collaborating with the Learning and Skills Council to develop its "Train to Gain" programme, which is in essence a brokerage service for employers that helps businesses work with colleges to develop a more employer-focused curriculum.

The funding council is talking with three regions, the Northwest, Northeast and Southwest, to develop higher education involvement in this initiative.

While this first phase of Hefce's employer-led strategy will involve a range of pilot work, the second phase will see strong projects taken further.

In its April call for bids, the council indicated that extra funds could be available after the Comprehensive Spending Review has been completed.

It has also indicated that it wants employers to co-fund provision and that it is keen to see courses developed that help widen participation.

Employer concerns

However, universities have voiced concerns. Pam Tatlow, chief executive of Campaigning for Mainstream Universities, said: "We are very interested in this policy, and our members have led the field in employer engagement for years.

"The Government is clear that it wants to promote co-payment, but employers do not have a good record of paying upfront voluntarily.

"Universities must be funded on a sustainable basis to do this work. And it should not be used to widen participation on the cheap."

A spokeswoman for Universities UK said: "There is clearly a wide range of activity already in terms of employer engagement.

"This is not new to universities. It is important that any future approach is not top down, that universities can develop what they already do well and be properly funded."

She added that there were a number of bodies and initiatives in this area, notably the University Vocational Awards Council, Foundation Degree Forward, the Sector Skills Councils and Lifelong Learning Networks. She stressed that the Government needed to be careful not to confuse employers.

But the significance of the skills agenda for universities should not be underestimated.

"The interim report of the Leitch review on skills has set a key agenda here, stressing the importance of high-level skills," said the spokeswoman for the UUK. "The final report is due out in November and is expected to feed into the spending review."

claire.sanders@thes.co.uk

Next week: police studies

FUNDING FACTS

* Higher education institutions earned ?200.8 million in 2004-05 from continuing professional development courses for business (excluding those funded by the National Health Service and the Training and Development Agency). This is 1.5 per cent of the sector's total income

* Of new entrant undergraduate students, 10 per cent are on programmes funded by the NHS/Department of Health and social care

* Nearly 14 per cent of part-time students have their fees paid by their employer or by UK industry

* Just 1 per cent of full-time undergraduate students have their fees paid by their employer or UK industry

* Some 117 higher education institutions have reported to Hefce that they have a dedicated unit that provides an inquiry point for small and medium-sized businesses

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* In 2004-05, there were 10,370 full-time and 6,360 part-time foundation degree new entrants in higher education