The Government’s vision for higher education is one in which boundaries and hierarchies dissolve and further education plays a greater role in an effort to broaden the range and scope of two-year foundation degrees.

The vision also includes reaching out to students from “less traditional backgrounds”. Among other measures, this involves increasing targeted funding - partly by devising a more accurate method than using postcodes to identify economic exclusion - and sending role models from universities into schools and colleges.

The plans, driven by the aim to get half the 18-30 population into some form of HE, are about many things, but chiefly plugging a skills gap. This deficiency is most acute at “sub-degree” level - a mainstay of the FE sector.

The Employer Skills Survey of 2002 shows that associate professionals and technical occupations have the highest proportion of skill-shortage vacancies.

There is, says the survey, a cultural as well as a practical need for change: shorter, more work-focused courses are better suited to a culture of continuous professional development. Work-focused higher education is still perceived as the poor relation by employers, despite all demands for a labour pool better suited to the market.

Graduates with honours degrees earn 64 per cent more than non-graduates.

The incentive to pursue a traditional three-year course remains strong.

The Government recognises it needs to sell the idea of foundation degrees to overcome “the barrier of unfamiliarity and suspicion”. The carrot for institutions is that it will offer additional funded places for foundation degrees from 2004, and bursaries for students. With institutions given the flexibility to make their own charges for courses, the Government expects foundation degrees “to be competitively priced”.

The 18-30s are not the only focus: the Government wants to cater for all-comers. It intends developing the so-called 2+12+2 system, in which students do the first two years of a degree (or perhaps complete a foundation degree) in one institution with the chance of advancing to full honours elsewhere - and not necessarily within the confines of a further year or two.

If foundation degrees - practical, sharply focused and designed in part by employers - are the way forward, the logic of increased FE college involvement is inescapable. Many already work with partner universities, and the Government wants more of this.

But it insists that expanded provision must match the quality already expected from higher education. Franchise or consortium arrangements with colleges funded through higher education partners will be the primary vehicle.

However, not all colleges have a neighbourhood university able to work with them. Government has recognised that for a niche provider, or one lacking obvious HE partners, direct funding may be a way forward.

Each case will be considered on its merits by the Higher Education Funding Council for England (HEFCE) against criteria such as track record on quality and standards; critical mass; and the nature of provision.

A new national network of universities, “Foundation Degree Forward”, will offer a validations service. It will also act as a national centre for expertise, liaising with sector skills councils and professional bodies to draw up foundation degree frameworks. Government has long exhorted education and business to get closer. As a new strand of the Higher Education Innovation Fund, it proposes creating a network of 20 Knowledge Exchanges, “exemplars of good practice in interactions between less research-intensive institutions and business”.

Each Knowledge Exchange will receive up to pound;500,000 for each of five years. Proposals will be invited from individual institutions or those working in consortia. These will form a wider network, with the proposed New Technology Institutes - groupings of universities and colleges to work with industry - announced in 2001.

Bidders will need to show their work can help the local economy. They will also have to demonstrate strong support from stakeholders, as well as how they will improve what institutions or consortia can achieve.

As for FE-HE collaboration, the Government promises to remove the dead hand of bureaucracy. It says there are “unnecessary difficulties for collaboration ... presented by the need to respond to two different funding council regimes in relation to planning, funding and data collection ...

and in juggling requirements of quality assurance and inspection arrangements”.

Government recognises that teaching quality is crucial. It will make extra money available for pay if higher education institutions can show they have good human resource strategies that value teaching, and reward and promote good teachers. From 2004-05, it will not be necessary to have research degree-awarding powers for an HE college to become a university - a source of considerable controversy (see page 14).

Pay has long been a bugbear. In providing an extra pound;50 million in 2004-05 and pound;117 million in 2005-06, the Government wants to remove excessive bureaucracy and give HE institutions the freedom to spend this money as they see fit.

Once institutions show they have strategies to meet market needs and improve the performance of students and teachers, earmarked funding will be transferred into a block teaching grant.

The awarding body Edexcel is working with the DfES to integrate BTEC higher national diplomas (HNDs) into the foundation degree framework. Edexcel director of qualifications Paul Sokoloff says higher and further education colleges will be able to include HNDs in their plans, confident that these will, in time, become foundation degrees.

He says: “We expect BTEC higher nationals to continue to play a major role, within the foundation degree framework, as part of the strategy for encouraging wider participation in HE and meeting employer demands.”

This is the age of consultation. The Government recognises that if reforms are to work change cannot be imposed, particularly in regard to making foundation degrees attract students and be valuable to employers. It is committed to the concept, but wants to know what more it can do; and whether the proposed incentives are the right ones.

THE GOVERNMENT’S MAIN PROPOSALS

* Development funds to help key employers, universities and colleges design new foundation degrees

* Money to be made available via the HEFCE to institutions that can demonstrate it will be spent on the best teaching staff

* Funding regimes to be streamlined to ease collaboration between HE and FE colleges

* Establishment of Foundation Degree Forward, a network of universities to lead the development of foundation degrees, act as a “reservoir of good practice” and provide a validation service for degrees offered in FE

* Additional places in universities to be funded for foundation degrees rather than three-year degrees

* Incentives for foundation degree students via bursaries: pound;10 million on offer in 2004-05, rising to pound;20 million in 2005-06

* Foundation degrees to be competitively priced

* Value and significance of foundation degree as an end in its own right to be reinforced. Holders to be able to use the letters FDA or FDSc after their name, depending on whether degree is in arts or science

* Education Maintenance Allowances for poorer students - currently pound;30 a week - to be extended across England from 2004

* Administrative and legislative barriers to be reviewed to encourage FE-HE collaboration

* Professional standards on HE teaching due to be agreed by 2004-5. From 2006 all newly-qualified staff expected to obtain a teaching qualification

* First eight Knowledge Exchanges open for business in 2004-5

* From 2003, HEFCE to work with partners in building widespread use of credit systems, enabling students to break off a course and start again without having to repeat work

* Funding for pilot initiative, whereby HE students undertake paid, part-time support roles in schools and colleges