Universities: Impact of Government Policy
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Baroness Brinton
My Lords, I am grateful to the noble Lord, Lord Giddens, for instigating this debate. However, I take very gentle issue with his memory of the past Labour Government’s higher education policies, given his statement that he was concerned about the speed with which the coalition Government have implemented some of the reforms. It seems to be forgotten that the Labour Government introduced tuition fees in the first place a year after Tony Blair had promised not to do so in 1997, and that the same thing happened again as regards the introduction of top-up fees two years after they had promised not to do so in the 2001 Labour manifesto. They also commissioned the Browne review. I understand that the noble Lord, Lord Mandelson, said in March in this very House that had Labour still been in government it would have needed to double tuition fees at the very least, given the financial situation in which we find ourselves.
It is no secret that had the Liberal Democrats won the general election, we would have done things differently. However, I am proud of the coalition agreement which incorporated more than two-thirds of our manifesto pledges. Unfortunately, tuition fees policy fell into an area that remains unfulfilled, not least because of the size of the deficit and the need to reduce it firmly and to get the UK back to financial balance. However, following careful negotiations, the system with which we have ended up is significantly more progressive than the Labour system we inherited. That is not only our view but that of the Institute for Fiscal Studies. There are no upfront fees for students so that should not deter them from applying. Graduates will start to pay only when they can afford to, once they are earning £21,000 and there will be lower lifetime contributions for the poorest group of students compared with the system that Labour left behind. Importantly, there will also be more support for the Cinderellas of the higher education and further education systems, part-time students—now 40 per cent of our undergraduates—who had previously been shamefully shunned by the Government in a system geared entirely towards full-time students.
I always felt it was iniquitous that the previous Government did not provide any access to loans for fees for part-time students, many of whom come from low-income backgrounds and stay at home in order to study. However, there is an anomaly that I have raised with the Minister in the Education Bill where it is proposed that part-time students should start to repay their loans from the April three years after they commence studying, if their earnings reach £21,000. As I said in Committee on the Education Bill the other day, while I think this is probably a fairly small group of students, I know from my experience in higher education that mature students often make the decision to study while continuing to work part time. While an income of £21,000 sounds like a good deal for a 21 year-old, it is not a high salary for someone with home and family responsibilities to juggle alongside their study. I worry that this may deter some excellent prospective students from taking up their places on courses. There is also the fundamental question of equity. A full-time student undergraduate on a four-year course, whether an engineer or a linguist, will not be asked to start repaying until their course ends whereas part-time students are being asked to start repaying at three and a half years, regardless of whether they are close to finishing their course or not.
I had some involvement with Aimhigher in my previous role as the executive director of the Association of Universities in the East of England, and while I regret its demise—it has done some good work—I welcome the clearer direction on universities to actively target students from backgrounds where they may not have previously considered a university education.
For me a surprising element of the White Paper Students at the Heart of the System was the proposals regarding extra places for those HEIs taking students with AAB or equivalent qualifications. It seems to me that this may have a law of unintended consequences, with the possibility of bidding wars, and a real impact on recruitment for some of the middle-ranking universities. I hope that I am wrong. I give an example. Certain specialist courses such as medical or pharmacy courses might well be affected if numbers fluctuate fairly strongly in either direction. We are discovering that it is fairly easy to close down a university department but I know from experience that it takes a very long time to build up expertise, plan and then implement a new department. It is not always possible therefore to respond as quickly as is the case with more straightforward courses at, for example, a further education establishment. The impact on medical and healthcare education could be quite serious.
Today I have received a letter from the noble Viscount, Lord Hanworth, who is unable to be in his place. He writes wearing his professional hat as an academic at Leicester University about the difficulties that universities are having with the UK Border Agency in recruiting international postgraduate students who are partly funded by being employed by their host university and partly by bursary. In a bizarre decision, UKBA is now refusing to accept a university's guarantee that it will be paying that salary and maintenance grant, and so the students are being refused entry visas. This has long been a perfectly acceptable way of making up a package for postgraduate students which benefits both the student and the university in the short and the longer term. As a result, the university now finds itself short of teaching assistants. UKBA accepts guarantees from overseas governments and foreign institutions but not our own class one universities. I hope that the Minister will be able to find out more about this for the House and report back in due course.
Finally, I welcome the coalition Government’s focus on improving and widening participation. Funding provided by the Higher Education Funding Council has already enabled the Open University to attract 20 per cent of its newest students from the 25 per cent most disadvantaged communities. I hope that these priorities, and, indeed, the funding streams that support them, remain in place beyond 2012, as this work in delivering real results for individuals, universities and this country as a whole must continue.
Baroness Northover
My Lords, I remind noble Lords that this is a time-limited debate. When the clock hits six you have had your six minutes.
Lord Smith of Clifton
My Lords, I, too, thank the noble Lord, Lord Giddens, for this debate. It is very timely, coming as it does 12 months after your Lordships debated the Browne proposals. When I spoke in last year’s debate, I said that the proposals of the noble Lord, Lord Browne, would be a further acceleration towards the privatisation of tertiary education. I said that, while it would not be my preference, it is perfectly rational to have a free, untrammelled market in higher education, or to maintain the “mixed economy” that has been the main operating principle followed by successive Governments during the last half of the 20th century. The worst of all worlds would be to have a largely privatised system subject to bouts of ministerial interference.
I predicted that the consequences of the Browne proposals would be the adoption of a spate of rationalisation and consolidation schemes in both top and bottom-tier HEIs. That is already happening: north of the border, Glasgow has announced the abolition of courses in Czech, Polish, German, Italian, Portuguese, Russian and Catalan, leaving only Spanish and French as the modern languages it offers. This was reported in the Independent on 24 April. In the Guardian of 3 May it was reported that London Metropolitan University, itself the product of a merger, intended to axe two-thirds of its courses, including history and philosophy. This is only the start of the latest round of closures; previous years witnessed the abolition of many chemistry departments and the total demise of any fully fledged nuclear engineering provision. The process will continue and gather pace in the coming years.
Leaving individual universities to decide what they do means that the overall pattern of English university provision will not be based on any coherent strategy. As I said by way of example, how many departments of palaeontology should there be? At least one, presumably, but that is by no means guaranteed in the current haphazard and fragmented state of decision-making. David Willetts claimed in the Guardian on 20 September last that his policy was in line with,
“all three major postwar reports”—
Robbins, Dearing and Browne. This is an absurd contention: the Robbins committee had a very wide remit to review the entire system across the UK, whereas the other two were much more circumscribed, being limited to financing and fees without regard to any other consequences. David Willetts was not comparing like with like.
Not that that is his only failing; there are many to choose from. First, he forecast that relatively few universities would charge the maximum permitted fee of £9,000, whereas a considerable number have already said that they will, including a number of second-tier ones. Secondly, he forecast that while a proportion of graduates—those earning very low salaries—would not have to repay their loan debts, there would be an overall saving to the taxpayer. Reversing the ratio of costs of higher education from 60 per cent public funding with 40 per cent private, to 40 per cent public funding with 60 per cent falling on the individual will not, it now appears, achieve the savings to the Exchequer originally predicted. Mr Willetts got his sums wrong. With average fees of £8,678 per annum, this will lead to a shortfall of £450 million by 2014, as reported in the Guardian of 21 April. A similar calculation came earlier from the Institute for Fiscal Studies. Will the Minister, in winding—I have given notice of this request—please state what the current DBIS estimates are of the savings that will accrue to the public purse by 2014 and will she provide the data that support such calculations? These are crucial statistics that must be updated and published on a regular basis. Furthermore, it is clear that large numbers of graduates will remain in debt for most of their working lives. Mr Willetts was accorded the sobriquet of “two brains” some years ago; a ratings agency might reasonably now reassess this assessment.
There are further problems. First, the rate of return on a first degree has declined. The lifetime earnings premium that went with a degree is now much less than it was. Secondly, the world recession has seriously reduced the prospect of graduates securing well paid careers. It is no wonder that many school leavers are questioning the value of going to university. A decline in HE participation rates is predicted by vice-chancellors and UCAS. Furthermore, today’s newspapers are reporting a significant decline in applications to FE colleges from 16 year-olds. The combination of these new factors will lead inevitably to many university closures, mergers or takeovers and certainly to massive reductions in course offerings across the board.
In response to the emerging chaos, Ministers have come up with a number of policy refinements, if that is not too grand a description of the series of knee-jerk reactions they have been forced to turn to. Ministers continue to assert that the new system of fees and loans will be more equitable than the existing one. The deputy leader of the Liberal Democrats, my right honourable friend Simon Hughes, was co-opted by the Government to improve access. He suggested 10,000 means-tested scholarships of £3,000 per annum to be allocated through schools to bright, disadvantaged pupils, but this will be but a mere sticking plaster. A government advertising programme to explain and promote the new system was also announced, but this and the Hughes proposals will not really tackle the problem. The stark fact is that the new fees/loans scheme is so complicated that it cannot be easily or simply explained and that makes it very bad politics, which further compounds the problems.
The Government need to undertake a thoroughgoing review, on the scale of Robbins, of their HE policies for England, or risk a decline, as many noble Lords have said, in the international reputation of our universities and the quality of the service they give to our citizens. There must also be a radical reordering of our policy priorities, in particular away from military adventurism, so that proper resources can be allocated to our university system. Within the coalition, the Liberal Democrats need to insist on these measures if they are to recover any credibility with the electorate on tuition fees and the costs that fall on individuals who undertake higher education. The chaotic system of English higher education must be addressed and remedial action taken.
Baroness Northover
I remind noble Lords that when the clock reaches six minutes—there are many academics here and I am sure that they can work this out—they have reached the end of their time. Otherwise, we risk not leaving enough time for the Minister to reply to noble Lords’ questions.
Baroness Verma
My Lords, I am grateful to the noble Lord, Lord Giddens, for giving this House the opportunity to discuss higher education once again. I feel quite a sense of trepidation, being surrounded by so many learned and well versed noble Lords. Clearly, the contributions that we have heard today from our colleagues, and the universities where they serve, serve this House incredibly well.
The first thing that I emphasise is that the Government value the autonomy and excellence of all our higher education sector. Allow me to quote my right honourable friend the Minister for Universities from last week. He said that universities were,
“amongst our greatest national assets”,
and said how we value how they change people’s lives. He went on to say:
“Our universities must always have space for the free spirit, the eccentric, the blue skies researcher … Without that our national life, however prosperous, would be grey and diminished”.
Universities are not just places of teaching and learning. I agree completely with the noble Lord, Lord Giddens. They are world leaders in innovation and research. Their breakthroughs regularly dominate the news. You may have seen the recent announcement on Beneforte broccoli, where research funded by the Government’s Biotechnology and Biological Sciences Research Council has led to the development of a highly commercial food product that will be both grown and sold in the UK. It will give a real boost to our agriculture, our personal health and, of course, the economy. Then there is graphene, the world’s toughest and thinnest substance, which was developed at Manchester University. To help to capitalise on its discovery, the Government announced earlier this month an investment of £50 million to develop a graphene global research and technology hub to translate this discovery into wealth and job creation for the UK.
Such achievements are vital to the reputation of our universities and the investment that they attract. Indeed, they represent a key export sector, worth around £8 billion, which lures business to the UK as well as the world’s most gifted researchers. According to the most recent international rankings, only the United States has more universities in the top 200, as has already been mentioned, but the UK has a greater impact relative to its investment. For all these reasons, the Government could not allow the financial crisis and the urgency of reducing the deficit to imperil these essential institutions. That is why we are introducing a different funding system.
The universities that we have today are teaching more than 2.4 million students, a substantial increase over the 171,000 students of 1962. From the next academic year, funding and more of it will flow into universities according to the choices made by students. Universities can go a long way to maintaining their incomes, provided that they remain attractive to prospective students—a point to which I shall return in a moment. Some talk as if the shift to student fees and loans will mean a loss of Exchequer support for our universities and, indeed, for beloved subject areas, but that is wrong. Even after 2012, the contribution from the taxpayer to the higher education sector will be very substantial. For one thing, it will cover the upfront fees for the vast majority of domestic students, as well as providing grants and loans. We are looking at around £6.5 billion in tuition loans on top of the £2 billion of remaining teaching grant going to subjects that are costly to deliver. We estimate that the cash going to universities in grants and fee loans combined could be 10 per cent higher by 2014-15 than it is now. We can afford this only because we will get a lot of it back, eventually, from higher paid graduates who will repay their loans.
In addition, the Government will spend £4.6 billion on research programmes every year until 2015 within a ring-fenced budget. We will spend over £600 million on capital for research in 2011-12. Shortly, we will also publish an innovation and research strategy to ensure that we maintain and strengthen our position as one of the most forward-thinking countries in the world. The strategy will set out how the UK can build on its existing strengths to become the most productive research base, globally, and high levels of investment in intangible assets to underpin sustainable private sector-led economic growth.
I return to the teaching mission of colleges and universities, which is sometimes overshadowed by the national interest in research. As we ask students to invest more in their personal futures, universities must focus even harder on the quality of the educational experience that they provide. The Government are introducing reform so that students can select the best institution for them from a sector which offers a greater range of provision, in which institutions are competing for applicants on both quality and cost. It will be vibrant, efficient and responsive—a sector with students at its heart. We want university to be available to the brightest, including those who can demonstrate that they have the potential to succeed. It has always been the case that not every applicant can secure a place. Going to university must remain a competitive process, with institutions retaining their autonomy and continuing to decide who they admit.
At the same time, the Government will always have to control the amount of public funding spent on higher education. In the past, they have done this by restricting the numbers of students each university can recruit annually. This has meant that there are lots of students every year who achieve the highest grades but cannot secure a place at the university of their choice. We want to change that, while ensuring that the overall cost to the public purse remains affordable. For university entry in autumn 2012, institutions will be able to recruit as many students as they can with the AAB grades or better at A-level, or the equivalent in other exams. This will allow more high-achieving students to attend the institution of their choice, and will allow institutions which can attract more of those students to expand. It will not prevent students with lower grades or alternative qualifications getting a place at university. This is simply the first step in freeing up student number controls.
Alongside this, we plan to create a flexible margin of 20,000 places in 2012-13, which will enable FE colleges and other providers to combine good quality with value for money. We know that there are providers which can offer a good learning experience for less than £7,500, and this will offer a wider choice for students.
Before concluding, I turn to some of the points that have been raised by noble Lords. I am mindful of the time, so if I curtail this I will write to noble Lords to whom I have not managed to respond.
In response to the opening remarks of the noble Lord, Lord Giddens, I agree that some things are yet to be seen through, reviewed and monitored. However, I dispute his point that the universities are becoming marketplaces for the sake of marketplaces. We are trying to ensure that, at long last, students have greater opportunity and choice in the sort of subject matters that higher education institutions are able to produce, and to enable those who have never thought of going into higher education to see it as a conduit to going in with those choices, knowing that their loans and student fees will be paid up front. The noble Lord failed to accept this in his speech. He is stuck with the concept that he has over the years. I am not trying to downgrade the noble Lord’s point. I am just trying to say that the world has moved on. The way in which institutions respond must also be more responsive.
My noble friend Lady Brinton reminded me and the House that I will arrange for her to meet my right honourable friend David Willetts to discuss the repayment of loans and fees for part-time students. I extend that invitation to noble Lords who have taken part in the debate today. My right honourable friend is very happy to meet people to discuss part-time students’ repayments.
A number of noble Lords mentioned social mobility. I accept that social mobility has stalled, as I know do most noble Lords. It had also stalled over the 12 to 13 years that the previous Government were in place. That is why we have to introduce this important programme of widening participation. We want to ensure that everybody is able to benefit from the great lifetime benefits that graduates can enjoy once they have participated in further education. The participation rate of disadvantaged young people at institutions requiring higher entry tariffs has remained almost flat over recent years. We need to see progress on fair access, especially at our most selective institutions. That is why the Government have introduced a new framework which places increased responsibility on universities to widen participation. It is extremely important to ensure that no person who has the ability and the potential should be deterred from going to university simply because they feel that they would not be able to afford it. The Office for Fair Access will be strengthened. Annual access agreements have been put in place and there will be tougher sanctions on universities that fail to meet the access targets that they have agreed with OFFA. From the first round of new access agreements for 2012-13, OFFA estimates that by 2015-16 universities will be spending around £600 million on supporting fair access and widening participation.
Noble Lords spoke about overseas lecturers and overseas students. My officials and I are working very closely with the Home Office and the UK Border Agency to ensure that the needs of both the public and private education sectors are fully articulated and their interests are properly represented in all immigration policy-making decisions. We have made good progress on tackling the hurdles that institutions can face in bringing foreign academics over as guest lecturers and external examiners by expanding the terms of the tier 5 government-authorised exchange scheme. We have had success in raising the status of scientists and researchers, many of whom will take jobs in universities. Exceptional academics can apply via the new tier 1 exceptional talent route—a route that takes account of the expert views of the national academies. Ministers will continue to work with the UK Border Agency and with universities on removing obstacles to the essential business of the global intellectual exchange.
The noble Lord, Lord Faulkner, asked about the numbers of midwives and nursing graduates. This is an issue for the Department of Health but I will take it back to that department for him.
Noble Lords talked about postgraduate study. We will continue to monitor the impact of our student finance reforms on postgraduate studies. In cash terms, HEFC is maintaining its research degree programme supervision funding, which will support the next generation of researchers, at £205 million for 2011-12. HEFC has recently consulted on its proposals for reforming the allocation method for postgraduate research funding from 2012-13 and aims to publish its response by the end of 2011.
A number of noble Lords, including the noble Baroness, Lady Coussins, spoke about modern languages. I will take back to my right honourable friend the Secretary of State her concerns about languages in schools. However, I can tell her that since 2005 in higher education modern foreign languages have been classified as strategically important and vulnerable subjects, which means that via the Higher Education Funding Council the Government have provided additional support to ensure the continued availability of language places. The European Commission’s Erasmus programme and fee waiver provided by HEFC will continue for 2012-13 but we are working on options beyond that. That discussion is still going on and if I hear any further progress I shall inform the noble Baroness.
Noble Lords mentioned the impact on ethnic minority groups and here the Government have a good story to tell. There is a higher proportion of students from minority ethnic communities going into higher education than is represented in the working population. Research indicates that coming from a minority ethnic group seems to have a positive impact on a young person’s aspiration to enter higher education, even compared with those with the same prior attainment. Minority ethnic young people are also more likely to enter higher education than their white peers.
BIS undertook an equality impact assessment of the higher education funding reforms and changes to student finance in November 2010. The overall assessment was that the proposals would not have an adverse effect on minority ethnic groups. Another finding was that we expected the changes to the maintenance packages to benefit those in low-income households. Therefore people from minority ethnic backgrounds were more likely to benefit from the more generous packages that we were proposing.
As for how much students will pay and access agreements, the Government have already agreed a £6,000 threshold from 2012, but we have also insisted that institutions do more to promote fair access and widen participation. Those universities wishing to charge up to the maximum threshold of £9,000 will have to work under some stringent and strict frameworks and ensure that they are doing everything possible not to exclude people from poorer backgrounds. We know that OFFA is going to be rigorous in ensuring that this happens, but the Government, as always, will monitor the outcomes and respond if we feel that progress is not being made.
I know there is some concern about arts and humanities. Humanities and social sciences are, in some cases, losing their teaching grant, but funding will flow into arts and humanities courses via student tuition fees and the Government-subsidised student loan. So even when there will be no teaching grant for a discipline, it does not mean that there will be no Exchequer contribution. There are some disciplines that are officially recognised as strategically important and vulnerable and HEFCE is consulting on how the remaining teaching grant should be allocated. We will present final proposals for this in autumn 2012-13.
I would like to congratulate the noble Lord, Lord Sawyer, on his university being awarded the university of the year title for 2010. I will read carefully the questions that he put to me, but I absolutely agree with him that universities change the shape the cultures of communities, and Teesside has shown that. It is a good model for universities to look at when they feel they are under threat. Teesside has changed to meet the evolving needs of the student population, but also that of the community of Teesside.
I say to the noble Lord, Lord Bew, that I am new to this department, so in some of my responses I might need to beg the patience of the House in taking away some of his questions. However, I agree that rigid equality assessments are needed and if they have been done, I will make sure that the information is passed through to the noble Lord. If they have not, I will make sure that I relay the question to my right honourable friend.
The noble Baroness, Lady Howells, asked about degree-awarding powers and university titles. The White Paper said that we would review the use of the title “university” so there are no barriers to smaller institutions being classified as a university. The White Paper also undertook to decouple degree-awarding powers from teaching in order to facilitate externally assessed degrees by non-teaching bodies. These proposals are currently being consulted on via a new fit-for-purpose regulatory framework for the higher education sector which will be due to close on 27 October. We will then consider the responses.
I say to my noble friend Lord Smith of Clifton that the Government will still achieve savings of £36 billion by 2014-15 from the HE budget to contribute to lowering the deficit. The long-term cost to Government of student loans depends on the average amount borrowed by students rather than the fees charged, and additional contributions by graduates who benefit from higher education will result in a long-term saving to the Government.
I have run out of time. I have several responses to get through, but I would like to finish with my conclusion, so I shall read Hansard and respond in writing to the points that I have not answered. Although our reforms are often presented in the context of serious financial challenges, they nevertheless represent a significant opportunity—the opportunity for the student to have a stronger voice. Over the years, universities have had such strong incentives to focus on research that we believe that the role of teaching has been undervalued. That has got to change. Putting financial power in the hands of students will help to put them at the heart of the system. I am sure that no one would disagree with that. It is our ambition to lift the burden of centrally imposed bureaucracy on the higher education system. Freeing up student numbers, for example, will give institutions more flexibility. We are also looking at other ways of removing impositions over time.
This has been a really important debate. Your Lordships have brought real wisdom, expertise and, of course, challenges to the discussion. That is right and necessary. I did not go to university because I was not allowed to. I have fought a lifetime to ensure that those who want to and are able to should be able to go. I hope that we will have constructive discussions in the future so that no one has to be in my position, where culture and not potential stops someone going to university. I thank the noble Lord, Lord Giddens, for this debate.