Lifelong Learning (Higher Education Fee Limits) Bill

(Limited Text - Ministerial Extracts only)

2nd reading
Monday 19th June 2023 Lords Chamber

Moved by

[Baroness Barran]

That the Bill be now read a second time.

[The Parliamentary Under-Secretary of State, Department for Education (Baroness Barran) (Con)]

My Lords, I am delighted to be back in the Chamber to bring forward another significant piece of legislation for our skills reform agenda. I am particularly looking forward to the speeches today from my noble friend Lord Sewell of Sanderstead and the right reverend Prelate the Bishop of Sheffield.

This Government want learners to be able to access courses in a more flexible way in order to fit study around work, family and personal commitments and to retrain as their circumstances and the economy change. The Lifelong Learning (Higher Education Fee Limits) Bill will help create a new route for people who require student finance for study at levels 4 to 6 in further and higher education institutions. It will make it easier for people to study flexibly, preventing learners being charged disproportionately for choosing to study in a way that suits them, and ultimately to acquire skills that can transform their lives.

This Bill does three key things. First, it will allow for fee limits for all types of courses to be set in a consistent and appropriate way through enabling fee limits to be based on credits rather than academic years. What this means in practice is that modules and short courses, as well as more “traditional” degree courses, will be priced according to the amount of learning they contain. This will create a more flexible system and will go a long way to encourage more people into post-18 education.

Secondly, this Bill introduces the concept of a course year, rather than an academic year. This allows fee limits for courses and modules to align accurately with the start date of a student’s study. Doing so will mean that, for example, if a course starts on 1 October, the fee limit will also apply from 1 October rather than from one of four fixed dates, as it does within the current academic year system.

Finally, this Bill will allow the Secretary of State to set a cap on the total number of credits that can be charged for each type of course. For example, fees charged for a certificate of higher education will be capped at 120 credits, whereas a diploma of higher education will be capped at 240 credits. This will prevent learners being charged unfairly for their studies and ensure that fee limits remain aligned with current rates, based on standard practices.

The Bill includes a number of delegated powers to enable the credit-based fee limits system to work. These powers essentially allow the numerical detail which will determine a financial fee limit for each course year, such as per-credit financial limits and course year maximum numbers of credits, to be set out in regulations. This mirrors the existing approach in Schedule 2 to HERA and is not unique to fee limits. It is important that these numerical values are set out in secondary legislation so that further primary legislation is not needed to amend them when reviewed. There are no Henry VIII powers in this Bill.  

Noble Lords will have seen that the Government have now published their response to the public consultation on the details of the wider lifelong loan entitlement—also known as the LLE—and I thank those Lords who have taken the time to discuss this response with me in detail. While the Bill enables us to deliver the LLE, it is worth emphasising that its scope is tightly focused on changing the system by which fee limits are set.

The LLE will transform access to post-18 education and skills by providing individuals with a loan entitlement equivalent to four years of post-18 study, £37,000 in today’s fees, which can be used to fund courses and modules at levels 4 to 6 over the course of their working lives. It is estimated that at least 80% of the workforce of 2030 are already in work today. We want to give them the opportunity to upskill and reskill over their careers in order to progress and adapt to changing skills needs and employment patterns.

By putting level 4 and 5 courses on the same funding basis as traditional undergraduate degrees, the LLE aims to give people a real choice in how and when they study to acquire new life-changing skills. This Bill ensures that it costs the same for a learner to study a qualification module by module as it would to study that same qualification in one go.

In the consultation response, we said we would take a phased approach to the funding of modules, focusing first on modules of higher technical qualifications and some levels 4 and 5 advanced learner loan-funded courses, with new checks to ensure that they meet employer need. I shall give the House some examples of courses in scope for modular funding. They include the following HTQs: the higher national diploma in construction management for England at level 5; the certificate of higher education in cyber security at level 4; and a foundation degree in science—professional practice in health and social care—at level 5. The crux of our approach to introducing funding for modules is based on courses that we know have good employer returns.

Focusing initially on certain high-value level 4 and 5 courses will allow us to test and learn from the approach before extending funding, where appropriate, to modules of other high-quality courses at levels 4, 5 and 6. We also want to address the skills gap identified by the Augar review, which is overwhelmingly at levels 4 and 5, with fewer than 70,000 students a year doing levels 4 and 5 compared to almost 470,000 doing undergraduate degrees. OECD analysis suggested in 2021 that only 9% of all adults aged 25 to 64 in the United Kingdom hold a level 4 or 5 as their highest qualification, compared to around 15% of adults in France and 36% in Canada.

Overall, data on wage returns for levels 4 to 5 is compelling. The 2020 data from the Centre for Vocational Education Research shows that higher-level qualifications lead on average to better earnings outcomes than finishing education at level 3, for both men and women. For example, the average female level 5 achiever would earn approximately 57% more than would be the case if they stopped at level 3. This equates to roughly a £9,800 increase in annual earnings at age 26.

In order to support learners in understanding and deciding how to utilise the opportunities provided by these reforms, the LLE personal account will show their learning balance as well as clearly signposting the courses and modules that they can access to propel themselves into learning and to further their career aspirations. Whether they are studying a three-year degree, a higher technical qualification or another level 4 or 5 course, and regardless of whether they are studying at a university or a college, every student should be confident that higher education will help them to succeed in life. This is especially important at a time of challenging economic circumstances.

I am delighted to bring the Bill before the House today and that we have reached this pivotal stage in driving a transformation of post-18 study. This legislation will form a vital part of the LLE, which as a whole will allow students in generations to come more flexible access to courses, helping them to train, upskill or retrain alongside work, family and personal commitments, and as both their circumstances and the economy change. I beg to move.

--- Later in debate ---

[Baroness Barran (Con)]

My Lords, I thank all noble Lords for their contributions today. In particular, I thank the right reverend Prelate the Bishop of Sheffield for his description of lifelong learning within a Christian context—I think he will agree with me that just sitting in this House listening to colleagues extends one’s lifelong learning still further—and my noble friend Lord Sewell. I am not sure about his football metaphor, but if he is secretly a spin bowler, I think he might find himself popular at Edgbaston in the next day or two. In all seriousness, I look forward to working with and listening to him, with his great experience in education, and benefiting from that.

Given the breadth of your Lordships’ contributions, I will not be able to cover everything in the time available to me, but I will write and address the points raised this afternoon. I reassure the noble Baroness, Lady Twycross, that I will try to address at least some of the points that she rightly raised. I acknowledge and thank noble Lords for the spirit of the House and the way in which they are all aiming, in the noble Baroness’s words, to make the Bill the best it can be.

I start with the credit transfer issues raised by the noble Baroness, Lady Twycross, the noble Lords, Lord Stevens of Birmingham and Lord Rees of Ludlow, and others. The Government will not impose credit transfer arrangements but will instead seek to facilitate credit transfer through other methods, including through the introduction of the requirement for providers to produce, in response to the noble Baroness’s request for clarification, a standardised transcript on the completion of individual modules—I hope that also addresses the question asked by the noble Lord, Lord Rees—and, to respond to points raised by the noble Baroness, Lady Garden, in relation to information, advice and guidance about the personal account where possible. There are numerous examples of good practice in the sector with regard to credit transfer, including provider-led initiatives to create credit transfer partnerships. These include collaborative mapping and shared curricula of certain programmes—including, of course, in healthcare.

Credit transfer across higher and further education will be very important. We are working with providers to understand how credit transfer can be encouraged without jeopardising the autonomy of the sector, giving learners the flexibility to study at a pace that is right for them while balancing their other commitments. Of course, this will require input from both government and providers to be successful, and that is happening.

The noble Lord, Lord Stevens, raised a specific question about why some courses, such as nursing, are not suited to the credit-based system. I think he expressed a concern about whether that would limit flexibility, but our understanding is that it will not. Nursing degrees do not use credits in a consistent way—as the noble Lord understands much better than I do—due to variations in the credits assigned to placements, and because credit-bearing units can cut across multiple years. We will address this by using a default number of credits to calculate the fee limit for each course year, and students will continue to receive loan funding—but I would be happy to meet with the noble Lord if he thinks that there are flaws in our analysis.

I permitted myself a small smile at the fact that the House was divided on the merits or otherwise of delegated powers in relation to the Bill. The noble Baroness, Lady Blackstone, asked about the timing of the secondary legislation. We expect the secondary legislation covering the fee limit and the LLE to be laid by autumn 2024, in time for implementation in 2025. The noble Baroness, Lady Twycross, suggested that not all the delegated powers were subject to the affirmative procedure, but all the fee-setting powers are subject to it. As I mentioned in my opening speech, the powers mirror what is already in HERA.

The noble Baroness, Lady Wilcox, and the noble Lord, Lord Watson, asked whether there was a risk that the Government could arbitrarily change the number of learning hours in a credit. As my right honourable friend the Minister for Skills and Higher Education said in the other place, the Government do not intend to change the number of learning hours in a credit unless standards in the sector change. Learning hours are, and should continue to be, based on sector-led standards.

The noble Lord, Lord Addington, and others asked whether the Government were working closely with providers and stakeholders to inform policy decisions. I reassure your Lordships that that is the case.

If I may, I will write to the noble Earl, Lord Kinnoull, on the issues he raised around devolution. He is right that policy detail is discussed very regularly with the devolved Governments, but I am happy to write and answer some of his quiz questions about different students in different jurisdictions for different periods of time.

As for the speed of the rollout, a number of noble Lords raised their frustration at the slow pace. The noble Earl, Lord Kinnoull, referred to the remarks of the noble Baroness, Lady Wolf, in 2015. I will take this opportunity to thank the noble Baroness for her very important work in this area. As I think your Lordships are aware, full courses will be LLE-funded from 2025. That includes full degree courses, higher technical qualifications and any advanced learner loan-funded qualifications where there is clear learner demand and employer endorsement.

The Government will be taking a phased approach to modular funding, making sure that there is clear employer demand and that they address skills gaps to support learners into the jobs that employers need. As your Lordships discussed, the initial focus from the start of the academic year 2025-26 will be on modules of higher technical qualifications and modules of technical qualifications at levels 4 and 5 currently funded through the ALL system where there is a clear line of sight to an occupational standard and employer support. That will allow us to test and learn from the approach before extending funding, where appropriate, to modules of other high-quality courses at levels 4, 5 and 6. I remind your Lordships that the Augar review was very clear in its recommendations to focus on the skills gap identified at levels 4 and 5.

A number of your Lordships, including my noble friend Lord Johnson, recommended exploring expansion of the Bill’s scope in relation both to micro-credentials and to levels 3 to 7. I understand the flexibility that your Lordships seek to create by including micro-credentials, but we have been clear that, in the words of Sir Philip Augar:

“A 30 credit course, in our view, represents a significant amount of teaching and learning, and is an appropriate minimum for upskilling or reskilling. It is also short enough to be combined fairly easily with work and other commitments”.


I remind the House that modules of a smaller size—my noble friend referred to modules of 10 to 15 credits—provided they can be bundled together in a single entry from a parent course to meet 30 credits, can be funded to allow sufficient flexibility for retraining. So funding would be available for, for example, a 20-credit module and a 10-credit module of the same course combined. Providers or awarding bodies are free to consider restructuring their courses into credit-bearing modules of different sizes.

Turning to the issues of inclusion of level 3 and 7 courses, raised by several noble lords, including the noble Lords, Lord Blunkett and Lord Shipley, and the noble Baroness, Lady Twycross, I understand why the House is probing this issue, but there are three main reasons for the focus the Government have announced on level 4 to 6 courses. The first relates to how the LLE itself will apply to level 7 courses; the second relates to the existing funding for level 3 courses, in particular; and the third relates to the economic opportunities created by greater uptake of levels 4 and 5. Of course, in the longer term the Government will consider how funding for level 3 provision can best work where individuals are not eligible for grant funding, as part of the next spending review.

I will start with level 7 qualifications. The LLE will be the student finance system for all study at levels 4 to 6 from 2025, across HE and FE. Integrated master’s courses will also be in scope. My noble friend Lord Willetts asked about the Government’s appetite for four-year honours degrees. One form of that, of course, is an integrated master’s. In 2021-22, there were just over 19,000 English-domiciled entrants to integrated master’s degrees, and these students will continue to benefit from this level of study via the LLE. More broadly, level 7 and above are already served by separate student finance products such as postgraduate master’s and doctoral loans.

In contrast, level 3 courses are funded for a range of individuals through other funding streams, such as free courses for jobs and the adult education budget. In addition, individuals will still be able to take out advanced learner loans for level 3 courses. The adult education budget includes a statutory entitlement to full funding for eligible adult learners aged 19 to 23 undertaking their first full qualification at level 3, and the free courses for jobs offer introduced in April 2021 gives eligible adults the chance to access high-value level 3 qualifications for free, which can support them to gain wages for a better job. Finally, the point has been made by your Lordships that—and as I said my opening speech, we believe that—there is a very strong economic case for focusing on levels 4 to 6, given the skills gaps we face in the economy.

A number of your Lordships—my noble friend Willetts, the noble Lord, Lord Stevens, and the right reverend Prelate the Bishop of Sheffield—talked about what perhaps I may describe as the implementation challenge from both a supply and demand perspective. The noble Baronesses, Lady Wilcox and Lady Thornton, both asked about maintenance loans for distance learners. Our emphasis, with the exception of those with a disability who, as the noble Lord, Lord Watson, pointed out, are eligible for those loans, is on making sure that these courses are as flexible as possible, including, potentially, distance learning. I think there was some confusion in the House about the status of online learning, which is of course part of distance learning, as rightly said by my noble friend Lord Dundee. Our emphasis is on making sure that these courses work for those leaving school or who are already in employment, and who have that flexibility. There is an enormous job to be done by the Government and providers in raising awareness of those opportunities, making sure that people feel confident to take them up and are clear on the improvement they can make to their future employability, earnings power and satisfaction in the workplace.

On the questions from the noble Lord, Lord Stevens, and others about the cost of delivering this provision, costs are relatively fixed in the provision of these courses, so volume will be extremely important to their viability from a commercial perspective. I again suggest to the House that there is something in our absolute focus on where we are starting that aligns with the pressures that providers face, in order to make sure that these courses are commercially viable, rather than spreading a large number of learners very thinly across multiple courses.

I shall try to speed up a little, the House will be relieved to know. On the quality of provision, which I know my noble friend Lord Johnson was concerned about and which the noble Lord, Lord Rees, raised, the Office for Students will continue to regulate providers and uphold quality. It will consult on introducing a new registration category for providers of courses that were formerly funded by advanced learner loans—including initial and ongoing conditions that would be appropriate—which we hope will support quality. On my noble friend Lord Johnson’s point about all future modules being derived from existing qualifications, to be clear, they will need to derive from an HE qualification, but not necessarily in future from an existing one, although clearly the initial modules are likely to do so.

A number of questions were raised about the short course trial, and perhaps it would be most helpful if I set out our learning from the trial in a letter. But I will include in it a link to an excellent blog, written by Professor Peck from Nottingham Trent University about the trial, on the HEPI website, for your Lordships’ interest.

On part-time learners and maintenance loans, a point raised by a number of your Lordships, the LLE maintenance offer will be available for part-time study below level 6. That is a major change and positive step forward from the current system, as the vast majority of part-time level 4 and 5 courses do not currently qualify for the maintenance loans. Although I absolutely heard the regret from a number of your Lordships about maintenance in respect of distance learning, I hope it will be acknowledged that this is a really important step forward.

My noble friend Lord Willetts asked how dropout rates will be measured in the new system. The Office for Students plans to consult next year more broadly on the B3s—the quality or performance measures for modules. It will be consulting on how they can be implemented, and there will be an initial call for evidence this year.

There is so much that I have not covered, and I apologise to the House for that. I will finish where the noble Baroness, Lady Wilcox, started in asking about the Government’s vision for the Bill. I stress the importance that the Government place on the Bill; your Lordships may have noticed that my right honourable friend the Minister for Skills and Higher Education has been present throughout the debate. I will steal the words of the noble Lord, Lord Blunkett, if I may: our vision for the Bill is that it is part of the jigsaw he described but also that it will help to deliver to every individual in this country clarity on their personal ladder of opportunity and on the fact that they have hope and a real sense of opportunity for themselves in their career. Through it, we will transform the productivity of this country.

Bill read a second time and committed to a Grand Committee.