(2 years, 1 month ago)
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Baroness Sherlock (Lab)
My Lords, in May 2019, the then Prime Minister, Theresa May, launched the report of the Augar review. That was a long time ago, and it feels like a very long time ago. I wish I could say that the time has been well used, but let us have a look at what has been put out in this report.
First, there are changes to student loans. From the academic year 2023-24, the interest rate on loans will be changed to RPI for everybody, which is interesting, because Ministers keep telling me that RPI is no longer an official statistic because of concerns over its methodology. I can only assume that, somehow, it is not good enough when you are paying money out to benefit recipients but it is fine when you are taking money away from students. If only the noble Lord, Lord Forsyth, were here, I think he would have something to say about that.
Secondly, it reduces the repayment threshold to £25,000 and increases the repayment term to 40 years—much of a working life. For those on the current loan scheme, the repayment threshold will stay at the current level until 2024-25, which, given the current inflation rate, is quite a bit of fiscal drag. The effect of these measures together is highly regressive, hitting the lowest earners the hardest.
Paul Johnson of the IFS said this about it:
“looked at from the point of view of progressivity, redistribution, winners and losers, the reforms look truly horrible. Low-to-middle-earning graduates could be made about £20,000 worse off over their lifetime by the changes; the highest earners could benefit by £25,000.”
The equality analysis published alongside the consultation document said that
“among new borrowers, the largest proportional increases in lifetime repayments will be from lower earners … by 174% for those in the 4th decile”.
Meanwhile,
“the highest lifetime earners among new borrowers will experience large decreases in lifetime repayments (down 26%)”.
Why have the Government chosen to reform the loan system in a way which so profoundly benefits higher earners and hits those on lower incomes?
If noble Lords are wondering what the attraction of this particular approach is, it is perhaps worth mentioning that, thanks to a quirk of government accounting rules, these changes make the public finances look quite a bit better, but only in the short term. The IFS says that it will take about £1 billion off the cost of the student loan scheme, but:
“We expect the budget deficit to fall by about £5 billion in 2023 as a result of the changes, with subsequent hits to the deficit further down the road as new loans accumulate less interest.”
It finishes, drily:
“This will please the Treasury.”
Indeed it will.
However, this will not please many people because the pain does not fall equally in other ways. The equality analysis says that women, disabled people, some ethnic minorities and those from certain regions are likely to face increased lifetime repayments. Men gain and women lose. On average, men will repay around £5,500 less and women will pay £6,600 more. The IFS notes a remarkable comment:
“the taxpayer cost of funding men’s student loans will actually increase as a result of the reform … the saving on women’s student loans alone is greater than the total at £1.6 billion.”
Women students are not only paying for the reduced cost to the Exchequer; they are paying for the men’s changes as well. The Minister will doubtless say that this discrimination is not intentional, it is just that women earn less. But the Government know that women earn less across their lifetime. So, having known that, can the Minister tell the House what consideration was given to the differential impact of these proposals before deciding on them?
The Government are also consulting on other measures, including reintroducing government controls over student numbers. But not just by a global figure; they are consulting on whether to control them by sector, provider, subject, level or even by mode of study. Are the Government planning to do all of them? Might they do them all? Could the Government conceive of a world in which the Secretary of State could decide that physics is in but history is out? Could he close down the music department at Lindchester University completely? Could he decree that all computing is going to be done in FE from now on? This may not be their plan, but there is no way to tell from the documents published what their plan is. So could the Government give the House some hints?
They are also consulting on minimum eligibility requirements, including an option of requiring level 4 or above—that is a grade C in old money—in maths and English at GCSE. I found it quite hard to work out the numbers affected, because the tables in the equality analysis are quite confusing, but the Minister may be able to shed some light on that. I am pretty sure this will have a differential effect with regard to region and disadvantage.
It is not just about access to university; it is about access to the loan book. The Minister can confirm that presumably a student whose parents—or who themselves—could pay fees upfront has no problem, but then what happens to the more than half of pupils eligible for free school meals who will leave education without GCSE maths and English? Can the Minister tell the House what work has been done to look at the effect of such a plan on poorer children and young people from deprived areas?
There is also a proposal to limit funding for foundation years—and yes, once again this has differential effects. The equality analysis says that
“mature students and black, Asian and mixed/other ethnic minority groups … may be at greater risk of reduced access to HE and choice of provision”.
This is all really very disappointing. Augar was launched amid concerns about fairness and affordability for students, but those are clearly not the drivers at the heart of this response. The loan reforms are regressive and will hit lower-earning graduates. Rather than focusing on raising standards in schools and in HE, they risk penalising those who already find it hardest to get on through education.
Meanwhile, there is nothing on living costs for students, nothing to boost efforts on widening participation and nothing on the timing of admissions—except after a very big think they have decided not to do anything at all about post-qualification admissions. The consultation on the lifelong learning entitlement is still really vague. There is quite a lot on the how but not very much on the what, and certainly not on the why.
We have waited a thousand days for a response to Augar. That is roughly the length of an undergraduate degree, I reckon—you could probably do a PhD in that time; it is pretty much three years. After all that time, where is the strategic plan? Where is the vision for a strong, diverse higher education system that could help all of our young people and students to fulfil their potential? This feels like a missed opportunity. I hope the Minister can persuade me otherwise.
Lord Addington (LD)
My Lords, this is a very odd Statement because it suggests one or two nice things but does not really give us much detail. As the noble Baroness has just pointed out, the noble Lord, Lord Forsyth, is missed on this one. His intellectually honest toe-caps have gone into the ribs of many of us here and the Government Front Bench has actually felt them on many an occasion. A student finance system that celebrates going from 23% repayment to maybe half is a weird thing. Why do we still persist with this loan system? It is seen to be financially failing—unless creating a form of junk bond at the end of it is the aim. There will be not quite so much junk; that would seem to be about the essence of it.
If we are looking at how we get further education better into the system by giving better bonuses for lifelong learning—a suggestion of something that might be better in the future—we have to get people to go on the courses. What are we doing about careers guidance that would improve what people know about this? The first thing you will have to do is to train teachers, who are, let us face it, predominantly graduates, and we all know that what we did is right—if you do not come from that group, then you are very much in a minority—as we “stick to nurse”. Where is the training to make sure teachers are giving the right information to people or at least stand half a chance of so doing?
This has not got any easier with the introduction of T-levels and the removal of BTECs, which provided a series of fairly established ways of finding your way into higher education and the level 4 and 5 qualifications which are mentioned. We need some clear guidance to get this through and see how they are going to all tag in together. At the moment, I would say that it is an optimistic mess. We are not quite sure what the Government are expecting. It is going to be better, and it just might be that, after my entire lifetime, in relation to people at levels 4 and 5—I think it is technician-level qualification—we might be starting to address that, but we are doing it in a very chaotic way. The paths into education have fundamentally changed over the last couple of years, and they have changed in an incoherent manner.
To come to the last point, which the noble Baroness also touched on, if we have a special educational needs review taking place, why are we putting in a requirement for English and maths, which are the things that certainly the group I come from—that is, dyslexics—find difficult? It is 10% of the population; stick in dyscalculia, and that is another 3%, and those are conservative figures. Why are we making it so much more difficult for this group to get on to that pathway? When it comes to adult entrants into education, we are getting rid of BTECs, which were the way in, and we are saying that people have to have two A-levels. If you want later entrants—if you want entrants after having done, say, a level 4 course—why are we putting this in? It does not make any sense. Can we have some coherence about this?
Reading this as it stands, the Equality Act might have quite a lot to say about it. I have mentioned only two groups; others are available. Can we get some coherence around this? At the moment, the Government have waved a few ideas at us. The repayment structure may be slightly better for the Treasury, but I do not think it makes much difference to anybody else. Can we please hear what the Government are really about? If they are going to limit the amount of money we waste on the repayment structure, they have set themselves a very unambitious target.
The Parliamentary Under-Secretary of State, Department for Education (Baroness Barran) (Con)
I thank the noble Baroness and the noble Lord for their remarks and their questions. The noble Baroness rightly focuses on issues of fairness and access to higher education. The Government have tried to balance fairness to students with fairness to the taxpayer. Currently, a great proportion of the subsidy that the taxpayer makes towards higher education is funded by those who did not have the benefits of that higher education themselves. Students going to university have the advantages of their degree throughout their working lives.
Our estimate is that, over the course of their degree, the average graduate will borrow £39,300 from next year. Today, the average graduate would repay £19,500, and under the new proposed system, they would repay £25,300, so there is still a tremendous subsidy for the average graduate. The noble Baroness focuses on those who are more marginalised and are lower-earners, and she will be well aware that below £25,000 there is no repayment at all.
The noble Baroness also talked about the consultation around limitations on student numbers and minimum-entry requirements. This is, as she well understands, very much part of our drive towards having higher-quality courses. The numbers affected by the consultation—and I would stress it is a genuine consultation; we genuinely want to understand how stakeholders feel about this—and affected by proposed GCSE requirements would be less than 1% of students, and around 1% for the suggested entry requirement at A-level.
The noble Lord focuses on the barrier that that may present to those with special educational needs, but I would respectfully suggest it is also a tremendous barrier for everybody not to have English and maths at a basic level, since they are such an important entry requirement for almost every job. There are not many jobs in this country that you can do if you cannot read, write and add up. That is why the Government have extended their support, so that students can retake English and maths for whatever reason that might be.
Lord Addington (LD)
My Lords, will the noble Baroness give way for a moment? If you have got a disability, it means you have trouble doing it. You have legal requirements that say you are not supposed to discriminate and there are other ways around it. For instance, voice operation—which is available as a standard item on every computer for English. If you are not going to bring that into the system—which would have been a perfectly valid answer—why are you excluding them?
Baroness Barran (Con)
There is absolutely no intention to exclude at all. The department is heavily focused on trying to improve outcomes for pupils with special educational needs and the noble Lord will be aware of the enormous range of outcomes depending on which school a child with the same disability or special need goes to. We want to equalise those, so it should make no difference where a child goes to school in terms of their outcomes.
If I may continue, the noble Baroness questioned what we were doing in relation to foundation years. I did not quite follow her argument. We are consulting on reducing the maximum fee and loan limits for foundation years, from the current just over £9,000 to £5,197, and that is to bring it in line to be the same amount as an access to a higher education diploma. We hope it will make those foundation years—which are an important access route for those who may be more disadvantaged to get into higher education or potentially for mature students—more accessible.
Baroness Sherlock (Lab)
The Minister did not follow my argument. Maybe when she reads Hansard, she will see that all I did was to quote from the equality analysis that her own department produced to accompany the proposals, to show that it could have a differential effect on different groups.
Baroness Barran (Con)
Hopefully there will be a less differential effect than there is currently.
Baroness Sherlock (Lab)
No, I am sorry—I do not want to delay the House—but if she could actually read the equality analysis, it said that, as a direct result of the reduction in the foundation years loan, if providers found they could no longer fund and provide those courses at the lower rate, it could reduce access to higher education. It is there in the equality analysis.
Baroness Barran (Con)
I thank the noble Baroness for clarifying that.
Both the noble Baroness and the noble Lord questioned whether there was a strategy and a plan behind this. I am impressed, but not surprised, that the noble Baroness can do a PhD in 1,000 days. I will, if I may, try to set out the wider context a little. Our clear ambition is that students should succeed and achieve their potential. We are doing that in a number of ways. The first is by expanding the choices that we are offering them—for example, by expanding the higher technical qualifications, offering modular learning options and introducing T-levels, as well as the existing qualifications. We are expanding choice.
We are investing very substantially in higher education: £900 million pounds in the next three years, in addition to the £2.8 million that we have announced for further education, and the recent settlement for schools, as well as introducing a specific scholarship option for high-achieving disadvantaged students, so that they too can realise their potential. A great deal of work is going on, led by the Office for Students, on the quality of degrees.
On the noble Baroness’s point on student number caps, these approaches have been used in the past. I think our real aim is to identify those courses with very high drop-out rates or very poor graduate progression outcomes, and make sure that those are limited, but in no way to try to affect the more successful and higher-quality courses.
Our bottom line is that we want to maximise and continue to build on the successes in offering opportunity to students. Students from disadvantaged backgrounds are 82% more likely to go to university today than in 2010. We want to build on that and on the increase in students from black, Asian and minority ethnic communities going to university, in making sure that this country offers opportunity to all.
Baroness Falkner of Margravine (CB)
My Lords, I welcome the lifelong learning and other measures that will improve social mobility, but the higher education sector needs a root-and-branch review of the business model of our universities. Perhaps I need to declare that I have a family member who works in higher education and I have been associated with several universities in the past.
We are in another week when UCU members are on strike because of a broken system, where their pensions and working conditions are under attack, while managers pay themselves such astonishing amounts as to make even the private sector blush. USS administrators are using valuation scenarios so risk-averse as to lack any credibility, and the world-class system that the Government rightly applaud is in real danger of being depleted of future academic talent as rewards fall further behind, and the taxpayer’s interests are ignored under the pretext of university autonomy. When will the Government address these blatant anomalies in a sector that seems to have lost its sense of purpose? I associate myself with the remarks of the Labour Front Bench about vision.
Baroness Barran (Con)
The noble Baroness asks a number of important questions about the funding model for our universities but, as she acknowledged, they are incredibly successful in attracting international students, with over 605,000 of those students coming to our universities. In the other place the other day, my right honourable friend the Secretary of State quoted the figure that of every four international students, two go to the US, one comes to the UK and the rest of the world shares the last one.
We are aiming to build on that success; the investment that we announced along with this package aims to focus on both teaching and facilities to make sure that the highest-quality future-facing education is offered in our universities. My right honourable friend the Minister for Universities and Higher Education has been extremely active in stressing her concerns about how students’ experience has suffered over Covid and the responsibility of universities to respond, get back to face-to-face teaching and meet their needs, but I am happy to pick up in writing some of the wider points that the noble Baroness raised.
Lord Johnson of Marylebone (Con)
My Lords, I strongly support the Government’s student finance reforms, which strengthen what I think is the least bad system of funding higher education, but I have to say that I am puzzled by why the Government appear to be disavowing what in my view has been the standout levelling-up policy of the last decade: the removal of student number controls, which have allowed disadvantaged young people to go to university in far greater numbers—they are 80% more likely to do so in 2021 than they were in 2010. I would be very grateful if the Minister could reassure me that any student number controls will be imposed only in the most egregious cases of poor outcomes identified by the OfS and will not be used as a back-door means of reimposing sweeping caps or quotas on aspiration across the entire system.
Baroness Barran (Con)
I am delighted to reassure my noble friend that we will not be introducing the sweeping caps to which he alludes. As he said, universities have been extremely successful in terms of social mobility. By consulting on student number controls, we are not taking a position on what the correct proportion of people going to university should be, but we want to tilt provision towards the best outcomes for students and, as I said, make sure that our further education system also offers fantastic pathways to success.
Baroness Blackstone (Ind Lab)
My Lords, I admire a great deal of what the Government are trying to do in relation to the future of higher education but I suspect that there is a bit of a muddle going on: the Government’s right hand does not seem to be doing the same as their left; that was just very ably put by the noble Lord, Lord Johnson. I start by asking why it has taken so long—it is two and a half years since the Augar report was published. If the Government are so concerned about having a high-class higher education system, with large numbers of international students, to reach out to the most disadvantaged and to ensure better outcomes, there is some urgency in this. Of course it is complex but perhaps the Minister can say why it has taken so long to reach any kind of conclusions on this report. Moreover, we are going to have a lot more consultation. I am not against consultation, but this one could have started two years ago, in which case we would be rather nearer to getting some kind of conclusion on where we are going next.
I also want to pick up what my noble friend on the Front Bench said about the effects of the proposed changes in student finance. How can the Government justify the much higher repayments that the least well off will pay because of the many years of interest charges—a lower rate of interest than now but, nevertheless, a much longer period for which they will be paying interest—whereas the wealthier students will pay off their loans very quickly and not incur all this interest? Is it not time to introduce a truly progressive graduate tax, rather than the regressive system of repayments being put forward today?
Baroness Barran (Con)
The noble Baroness partly answered her first question herself. She understands it very well. This is hugely complex and sensitive. The issues around repayment rates and the relative burden on the taxpayer versus the student all need careful consideration. Obviously, there are huge financial implications. The noble Baroness will have seen the figures on the projected size of the student loan book in 2043 if we did not do anything about this, which is half a trillion pounds—I was about to say dollars, because “trillion” always sounds like dollars, but it is pounds.
On the consultation, I feel slightly that as a Government we are damned if we do and damned if we do not. If we had not consulted, I am sure we would have been criticised. I know that the noble Baroness was asking about the timing of the consultation; that also had to align with the work done on the policy. We hope that the consultation will help to answer some of the disadvantage questions to which the noble Baroness, Lady Sherlock, on the Front Bench and the noble Baroness, Lady Blackstone, referred. We really do want to understand how those groups that might feel the most difficulty in accessing higher education, particularly this new modular approach that will be offered, will be impacted so that we can structure the policy in a way that makes it most accessible.
The Lord Bishop of Durham
My Lords, I declare my interest as chair of the National Society. I thank the Minister for what is a very significant Statement, with wide-ranging implications for higher and further education, social mobility and the economy, current and potential students, and the future of many communities. A number of the policy ambitions are welcome, such as the higher technical qualifications. My concern, and hence my question, is about the unintended potential consequences of some of the proposals. What steps are the Government taking to ensure that these proposed reforms actively increase opportunities for students from disadvantaged backgrounds who aim at professional careers in our vital public and community services, or in fields such as the creative industries, which seem to fall outside the high-quality and high-cost criteria for intended increases in strategic investment described in the consultation documents?
Baroness Barran (Con)
I may have touched on some of the points that I hope can address the right reverend Prelate’s question. To go back to the consultations, they are explicitly to help us avoid unintended consequences and to get input from as wide a circle of stakeholders as possible. Obviously, we believe, as Philip Augar did in his review, that a modular, lifelong education system with the funding to back it up will be accessible, lead to greater career development over somebody’s lifetime and meet the skills needed in the economy. Specific elements, such as the scholarship I mentioned, can be used not just for higher education but for further education and apprenticeships. Lastly, these changes must also be taken in the context of the major investment in and major reforms we have made to further education and the bringing together of the funding approach between higher technical qualifications at level 4 and 5 and degrees.
Lord Storey (LD)
My Lords, the Minister talks about fairness in access and increasing the options for young people. But we know how the EBacc has reduced the options for young people in our schools, particularly those who want to do a creative subject. By doing that, the pipeline into universities, and indeed FE colleges, has become less, so we are seeing low numbers following creative subjects in higher education. Indeed, in the whole university sector there is only one professor of music. Surely if we want to increase options, we have to ensure that those options are available at our secondary schools.
Baroness Barran (Con)
I am certainly aware from the many schools I visit that some of the best of them offer a great deal of choice, both within and outside their curriculum. I understand and hear the noble Lord’s concerns, but if we look at the success of our creative industries—which are world beating, in that well-known phrase—we see that we are clearly providing our children, through school and through further and higher education, the skills they need to be very successful within them.
Lord Willetts (Con)
My Lords, I am very grateful to the Minister for her Statement and very much agree with the points made by my noble friend Lord Johnson. The changes to the financing of higher education make sense, because the system was always envisaged as one in which the majority of graduates would pay back the cost of their education. An arrangement in which we ended up with more than half of all student loans being written off was not the kind of balanced system originally envisaged.
I ask the Minister to agree that one of the reasons why the English higher education system stands out as one of the better systems in the world is the autonomy enjoyed by universities. We already have a consultation from the OfS on minimum thresholds to measure university performance, we will now have a consultation on number controls and we have another consultation on minimum educational requirements. Does she accept that if all these different, highly intrusive and detailed interventions are piled up on top of each other, the Government will be not boosting the quality of universities but eroding their ability to run their own affairs and therefore threatening the quality of our universities? I invite her to agree that if all those measures are imposed in total on universities, it would be hard to describe our system as one of university autonomy.
Baroness Barran (Con)
I absolutely agree with my noble friend about the importance of autonomy, but I hope he agrees with me that there is also a real responsibility to have transparency and for students to be really clear on the impact of this major decision and financial commitment they are making and what their future career and further education prospects are, based on the choice of course. We are not aiming to restrict university autonomy. We are aiming to improve transparency and, through transparency, to see that autonomy translate into even higher quality than we have today.
Baroness Fox of Buckley (Non-Afl)
My Lords, I welcome HE reform and have no objection to, for example, introducing minimum academic eligibility requirements to go to university, although linking access to student finance seems a cheap avoidance of winning the arguments for the virtues of the academic purpose of university. Is linking the value of a course’s quality to good jobs not a philistine undermining of knowledge for its own sake, turning universities into glorified job training centres? Is there a danger of a technocratic version of social mobility that instrumentalises the purpose of university, confirming that the only way to improve your social standing is to get a degree or go to university—the very opposite of what I assume the Government intend?
Baroness Barran (Con)
I apologise to the House if I was not completely clear in my earlier answer. I hoped and intended to refer to both the quality of jobs and the further education opportunities. Absolutely, our R&D is critical for the future of the country, and the quality of our thinking and debate, which I know the noble Baroness supports profoundly, is also really important. This is not just about jobs. But equally, I was made aware of six computing courses where the dropout rate is over 40%. Is that not something we should look at, compared with other courses where the dropout rate is much lower?
Baroness Morris of Yardley (Lab)
I understand why the Government want to make sure that students have the skills they need to manage the course, but there has been a lot of concern caused by the minimum eligibility requirements. Can the Minister confirm that the important thing is that the students have the skills they need to do the course, not that they have GCSE English or maths at level 4? The two things are not the same.
Secondly, successive policy papers from this Government have undermined the creative sector within universities. They have very much encouraged, and I agree with it, maths, science and engineering. I notice that humanities get a mention in this Statement; that is the first time for a long time. But in this policy document, what is there that will nurture and help to progress the creative industries in our universities, which are very much wanted by the economy and employers?
Baroness Barran (Con)
In relation to the point about skills, on one level, of course, I cannot disagree—I never enjoy disagreeing with the noble Baroness. Of course, people should have the skills they need to access their degree. However, in the majority of cases, if not the vast majority, English and/or maths at GCSE level may well be necessary for the course that they are aiming to do. I stress that this is a consultation; we genuinely have not taken a view on it. There has been a great deal of focus in the media, in the other place and in your Lordships’ House tonight on the GCSE requirement. We will also be consulting on whether one should reintroduce a minimum A-level requirement. But our focus on foundation degrees and on additional opportunities to achieve the levels in English and maths are also part of how we will make sure that this happens.
Baroness Bennett of Manor Castle (GP)
My Lords, on the new lifelong learning entitlement, are the Government not simply loading even more debt on to a generation already carrying an enormous weight of debt, and extending that debt for even longer? It is a great privatisation of the cost of education, which used to be borne by the public purse collectively, by an entire society that benefited from it, and by employers who benefited from those skills. Instead, what we are seeing is an individualisation and a privatisation. For the 40 years when people would expect normally, in many cases, to be settling down, having a family and buying a house, they are going to have this weight of debt settling on their shoulders, and it will be even a higher percentage of this generation.
Baroness Barran (Con)
I absolutely do not recognise the description that the noble Baroness paints of the lifelong learning entitlement. If she does not agree with the Government’s decisions on this, she might want to, if she has not already, look at the Augar report’s recommendations. There is a clear need expressed: 24% of people when surveyed said that they had considered continuing and part-time education. We do not know how many students who go straight from school to university would rather do a more modular approach. Nobody is imposing this on the student body; this is a choice for people to build their careers and their skills, to seize opportunities and to build our economy.