We'll work together to keep jewel sparkling

Alan Johnson is determined to see that UK higher education remains a diverse and competitive sector.

It is almost six months since I returned to the Department for Education and Skills as Secretary of State. So I thought it would be a good time to pause and reflect, particularly on my re-engagement with higher education, the portfolio for which I was previously responsible.

Almost the first thing I read upon my return was research commissioned by Universities UK about the contribution that higher education makes to the country's prosperity. Economists estimate that UK institutions are worth Pounds 42 billion to the economy, with an additional £3 billion in export earnings. Furthermore, every job in a higher education institution creates another one elsewhere in the UK.

Add in the contribution of the further education colleges that provide higher education and we have something approaching a £50 billion business that provides more than 600,000 jobs.

Well over 2 million students now benefit from the opportunities it offers, and graduates can still expect to enjoy lifetime earnings well over £100,000 more than those with only A levels or equivalent. Our joint objective must be to ensure that this remarkable success continues.

Of course, higher education is much more than just a business. It transforms the lives of those who benefit from it, which is why we want to increase student numbers. The chance to attend university should not be denied to those from poor families. We must maintain the momentum for schools, colleges, children's services and higher education providers to do more to narrow the participation gap between learners from different backgrounds. Continuing growth while widening participation is our objective now and for the forthcoming Comprehensive Spending Review.

Opponents of tuition fees argue that our reforms have damaged prospects for widening participation. But while the early data on new full-time entrants from the Universities and Colleges Admissions Service show that there has been the expected fall in number of acceptances from the exceptionally high figure of last year, numbers are up by nearly 4 per cent compared with two years ago. More important, the figures show that the proportion of new students from non-traditional backgrounds has not declined. I am also pleased that some subjects that we identified as strategically important are becoming more popular. Now we all need to pull together - Government, schools, colleges and higher education providers - to make sure this continues.

International students have been of increasing importance in recent years. They are not only a source of income but they also contribute to the sector's research capacity. They build intercultural awareness and help to foster trade and diplomatic links with other countries. Global competition for international students has intensified, and the traditional UK advantage of teaching in English is ceasing to be a unique selling point.

In addition, countries that traditionally have been major suppliers of students, such as China, now have burgeoning higher education sectors of their own. All of which makes the international market more competitive and underlines why the Government and the sector need to work in unison to make the second phase of the Prime Minister's initiative on international education as successful as the first.

Of course, no discussion of higher education would be complete without the research assessment exercise. I have been surprised at how the RAE has gone from loathed to loved in the three years I have been away from the DfES. We will announce the outcome of the consultation on the exercise shortly. For the time being, I would like to restate our commitment to a significant reduction in the burdens that the RAE has imposed on institutions.

The strength of our higher education sector lies in the autonomy and diversity of its institutions and students. Every university must establish a competitive position in strong markets. That goes for a small college with 100 students and our biggest universities that operate on budgets of several hundred million pounds. So I will be watching with considerable interest what happens when Oxford University votes on proposed changes to its governance arrangements. If our leading institutions want to remain globally competitive, the way they organise themselves is critical.

Higher education is vital to our economic, social and cultural progress. I'll work hard with Bill Rammell, the Higher Education Minister, to ensure that the Government does all it can to ensure the sector remains a jewel in Britain's educational crown.

Alan Johnson is Secretary of State for Education.