Gillian Shephard on why she has set up the review Britain's higher education system has long been acknowledged to be one of the best in the world. Over the years, it has produced thousands of men and women who have gone on to take the commanding heights - in science, in the arts and in business. It attracts students from all over the world who come to study in an atmosphere in which tradition is blended with innovation.

In recent years, higher education has seen some of the most dramatic changes in its history. Our universities no longer cater just for a privileged elite. In the 1960s, only one young person in 17 went on to higher education. Today this figure is approaching one in three. There are now more than a million full-time students in the United Kingdom, five times as many as at the time of the Robbins report. In addition, half a million people study part-time.

Similarly, higher education no longer exists to educate just young people - predominantly young men - prior to them starting out on their careers. There are now as many female as male students; and more mature than young entrants. Much of this growth has taken place since 1988 as a result of independence being given to polytechnics and colleges, the abolition of the binary line and the introduction of more competitive funding. Higher education now provides more highly qualified people than ever before for the labour market.

The number of new graduates gaining first degrees each year has doubled since 1979. Over one third of these are science, maths and engineering graduates. Our graduation rate is now one of the highest in Europe, second only to Denmark.

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By the year 2001, the number of graduates in the workforce is likely to be well over 3 million - twice as high as in 1981. And it is not just academic qualifications to which higher education leads. Over 15 per cent of those who have followed undergraduate courses leave with professional qualifications. Impressive though these achievements are, future success requires universities and colleges to continue to develop, while preserving their best traditions.

After such rapid change, it is time to take stock and consider the future. That is why, just over a year ago, I and the Secretaries of State for Scotland, Wales and Northern Ireland, launched a review of higher education. We asked consumers and producers for views.

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Their responses paid tribute to higher education's continuing role in advancing understanding and learning and in developing the powers of the mind. But they also emphasised its growing importance in securing our future competitiveness and economic growth. The global markets have been transformed by an information revolution and other technological advances. Our economic success will increasingly depend on higher levels of knowledge, understanding and skills. Higher education has a vital role to play. It can supply both young and mature people with those higher levels of skills and understanding and the ability to adapt to changing knowledge.

Today's graduates face a different world from their predecessors. They must be prepared for changes in the nature of work and the greater demands it makes. Increasingly, they will need to switch career more than once in their lifetime. We must ensure that they are equipped with the skills and flexibility required for the labour market of the 21st century - through both initial education and updating and upskilling throughout their lives. Higher education must be in the best shape possible to meet these needs.

As the pace of change quickens, there will be a greater premium on the capacity to innovate. Universities' contribution to the research base underpins the UK's ability to harness scientific and technological advances. It will become ever more important in enhancing wealth creation and our quality of life. Higher education can help too to drive local and regional regeneration through services to employers.

Changes in institutional structures, modes of study and information technology are opening up opportunities to a broader range of students both at home and abroad. Links with other parts of education and training are becoming more important, and boundaries are blurring. Higher education no longer needs to take place only inside a university or college. New technology enables more students to study at a distance Our consultations have made clear the extent of changes in both higher education itself and the context in which it operates. A huge and exciting agenda faces all of us with an interest in higher education. The scale of that agenda exceeds anything facing higher education since the early 1960s.

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Thirty-five years ago - almost to the day - the then prime minister proposed the appointment of the Robbins committee to review higher education in Britain and advise on its development. The Robbins report provided a landmark for policy that has stood the test of time well. But it is time to take a fresh and comprehensive look at the challenges facing higher education.

So, on Monday this week, I announced my intention to appoint a national committee of inquiry into higher education, to be chaired by Sir Ron Dearing. The committee will be supplied with the preparatory work that has already been undertaken in the education departments as part of my review.

I propose to invite the committee to make recommendations on how the shape, structure, size and funding of higher education, including support for students, should develop to meet the needs of the UK over the next 20 years. The committee will make appropriate arrangements to take account of the distinctive features of higher education in different parts of the UK.

I shall consult widely on the committee's precise terms of reference and composition and, in due course, I shall make a further announcement on the committee's remit and membership. I expect the committee to start work after Easter and to report by the summer of 1997.

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I am determined that Britain's system of higher education will continue to lead the world. But to do that we first need to ask some searching questions about what we require of higher education and then to think imaginatively about how those requirements can be met. This is the important task that has been set the Dearing committee.

Gillian Shephard is secretary of state for education and employment.

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