Higher Education: Funding

Wednesday 18th May 2011 Lords Chamber

Question

15:15

Asked By

[Lord Knight of Weymouth]

To ask Her Majesty’s Government what is the latest estimate of the proportion of higher education courses charging £9,000 from next year; and whether the consequential cost to the Exchequer has been adjusted.

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Henley)]

My Lords, 139 institutions intending to charge above £6,000 for any undergraduate course in 2012-13 submitted access agreements to the Director of Fair Access. Fee waivers and bursaries that universities plan to make available mean that we will not have firm cost estimates until students have received their loans late in the 2012-13 academic year. We believe that fee loans will be significantly below an average of £9,000. We will closely monitor the situation but currently expect the cost to be broadly within the Government’s estimates.

[Lord Knight of Weymouth]

I thank the noble Lord for that Answer. Back in December when we voted on this, we were told that the assumed average fee was £7,500 and that £9,000 would be charged only in exceptional circumstances. The House of Commons Library tells us that if the average fee goes up by just £400, the extra cost to the taxpayer through loan subsidy and underwriting will be £340 million. Therefore, I will try again with the Minister. It is clear that with more than two-thirds of universities saying that they will charge the maximum fee, £9,000 is not exceptional. If the assumptions were wrong, who will pay the extra cost? Will it be the national debt or students' prospects through fewer places?

[Lord Henley]

My Lords, as the noble Lord rightly said, we made the assumption in December of an average fee of roughly £7,500, with a 90 per cent take-up by students. However, it is up to higher education institutions to decide what application they should put in, and for the Office of Fair Access to look at that and make recommendations. As we made clear, there will be a number of bursaries and waivers, so we think that the average figure will come down well below the maximum of £9,000. I remind the noble Lord also that merely because a university puts in an application to charge £9,000 for one course, this does not mean that all courses will cost £9,000. I am afraid that the noble Lord will have to wait and see. As my right honourable friend Mr Willetts said in another place, we see no reason at the moment to amend the broad estimate that we put before the House last autumn.

[Baroness Sharp of Guildford]

What is the Government's estimate of how many students will not repay their debts after 30 years? In the light of that, are the Government continuing the policy of wanting to securitise the debt, and what sort of discount do they expect on such securitisation?

[Lord Henley]

My Lords, I have no estimates of the numbers of students who will not repay their loan. We hope very much that all those who benefit from higher education will, as we have made clear, have a higher earning potential throughout their working life. Therefore, it is likely that the vast majority will be able to repay their debt.

[Lord Tomlinson]

My Lords, I have declared my interests in the Register. Is the Minister aware that very good-quality higher education is taking place in the highly trusted sponsor private sector of higher education? Is he aware that the potential for discrimination against this sector caused by some of the present regulations will damage not only the institutions in that vital private sector but the partnerships that they have with state universities, many of whom will depend on the income stream that they will get from the private sector in order to make up the cuts in their teaching grants?

[Lord Henley]

My Lords, the noble Lord is right to draw the House’s attention to the private sector. There are, I think, five degree-awarding institutions in this country that are private. We hope that they will continue to prosper, and we will do what we can to ensure that they do so.

[Lord Tanlaw]

I declare an interest as chancellor of the University of Buckingham, the only privately funded university that operates a four-term year and a two-year degree. If the country operated a four-term year and a two-year degree, would these fees be necessary? If it implemented them now, could they not be reduced? Is he able to say whether the increase in tuition fees will increase the number of student tutorials?

[Lord Henley]

My Lords, the noble Lord always has very interesting points to make to the House about time, in whatever form it takes. His experiences of Buckingham are interesting and they are ones that universities throughout the country could look at. The point we should always make about higher education institutions, whether they are private, like Buckingham, or receive quite a large proportion of their money from the state one way or another, is that it is open to them to decide what they should do. The noble Lord has made a very interesting suggestion. Let them study that.

[Lord Willis of Knaresborough]

My Lords, when the Browne review came to pass, one of the great concerns of the sector was how to pay for, particularly, science and engineering courses, which are incredibly expensive. The £9,000 goes nowhere near covering the cost of those courses. Will the Minister assure the House that there are measures in place to ensure that universities get additional funding and make that very clear in a statement at the earliest possible opportunity?

[Lord Henley]

Obviously, one course will cost more than others according to the sort of subject being taught. My noble friend is right to make that point. It will still be open to HEFCE to provide money for courses that are necessarily more expensive. It will do that as is appropriate. Whether this is a matter on which my right honourable friend should make a statement is another matter, but I will certainly draw the point that my noble friend has made to his attention.

[Lord Foulkes of Cumnock]

My Lords, since the Scottish Executive are under the same financial constraints as the UK Government, will the Minister explain to the House, and indeed to English students, how it is that Scottish students can go to Scottish universities without paying any fees at all?

[Lord Henley]

My Lords, fortunately I am not responsible for the Scottish Executive, and I have no intention of answering for them. The circumstances in this country are different, but perhaps the noble Lord could have a word with his noble friend Lord Barnett and have a lengthy discussion, to his own benefit, on the Barnett formula, how it works and what benefits it brings to those who live north of the border.