The Minister of State, Department for Education (Baroness Smith of Malvern) (Lab)
My Lords, like others, I am very grateful to the noble Baroness, Lady Warwick, for raising this debate and introducing it in such an interesting and broad-ranging way. As noble Lords have said, as always with debates on the subject of higher education in the House of Lords, this has been a high-quality debate—not least when there are contributions from both those who have first-hand knowledge of higher education and those who have previously been university Ministers. I must make a confession at this point that, as a student, I probably protested against at least one of them—and I may well have been wrong.
In considering the Universities UK blueprint, I put it on record that Universities UK plays a crucial role in the higher education ecosystem and is an extremely well-regarded government stakeholder. As the collective voice of our universities, UUK advocates for the interests of higher education providers, offering invaluable insights into the concerns of the sector.
We welcome the report. Taken as a whole, it is an important contribution to the wider and crucial debate that we will of course consider carefully in our policy development, which I shall touch on later. It will help to ensure that our higher education sector, as all noble Lords have argued for today, remains resilient and continues to drive innovation and inclusivity. I reassure my noble friend Lord Griffiths that the Government remain committed to the most famous principle of the Robbins report on higher education,
“that courses of higher education should be available for all those who are qualified by ability and attainment to pursue them and who wish to do so”.
As others have said, our higher education system is not set in aspic. It is important—as is reflected in this report, and something I wholeheartedly agree with—to evolve our higher education into a lifelong journey, accessible to a larger and more diverse cohort than ever before. That transformation will ensure that the UK’s higher education providers remain world-leading and continue to play a key role in meeting the UK’s current and future skills needs. So many of our businesses and so much of our economy are dependent on skills gained in higher education degree courses.
I agree with the noble Lord, Lord Willetts, that universities provide academic, vocational and technical courses, and I will place in the Library the answer to the question he outlined. As the noble Lord, Lord Lucas, also identified, some courses enable us to combine different elements of learning, which is enormously helpful for us in balancing our lives.
The Budget set out the major challenges facing our public finances and public services and the tough decisions the Government are taking to fix the foundations and deliver change, some of which I know will affect higher education providers. As the noble Lord, Lord Johnson, pointed out, the teaching income per UK student that higher education institutions receive has declined in real terms since 2015-16 and is now approaching its lowest level since 1997. That is the reason why the Office for Students reports a growing number of higher education providers facing significant financial difficulty, with 40% forecasting deficits in 2023-24. As many noble Lords have argued, we need to put our world-leading higher education sector on a secure footing. In line with this, from 1 August 2025 we will be increasing both the maximum cap for tuition fees and maintenance loans for students, in line with forecast inflation.
The noble Lord, Lord Willetts, calls on me—as did my noble friend Lord Blunkett earlier this week—to engage the services of Martin Lewis in order to make sure that the explanation of the impact of that on students is clear: that there will be no upfront payment and no increase in monthly repayments. We will certainly take on board the need to continue to communicate that to students. I also recognise the case made by my noble friend Lady Young, the noble Baroness, Lady Grey-Thompson, and the right reverend Prelate the Bishop of Sheffield regarding the hardship experienced by students who have been impacted by the cost of living. This is reason for our increasing the maintenance loan as well, but I take the point that, in our further reform, we need to consider how to support students. I particularly hear the point about how we can ensure that this system is progressive.
Additional funding for higher education, which is of course an increased investment that we are asking students to make, has to be coupled with reform. I share the view of the noble Baroness, Lady Barran, that those things need to run concurrently. That is why, in the reform programme that we are engaging in, we will expect higher education providers to play a stronger role in expanding access and improving outcomes for disadvantaged students; to make a stronger contribution to economic growth; to play a greater civic role in their communities; to raise the bar further on teaching standards; and to drive a sustained efficiency and reform programme. I know that there is much good practice already under way, and this Government are also committed to respecting the autonomy and diversity of the sector. I note and agree with the points made by the noble Lord, Lord Rees, about the benefit of that diversity; it is a great strength of our world-leading system. This agenda will need a real change of approach, from both the Government and the sector itself. We will set out the Government’s plan for higher education reform by next summer to ensure that the system delivers against these priorities. I can reassure my noble friend Lord Liddle that there will be more thought and more reform.
Several noble Lords raised the issue of regulation. As noble Lords are I hope aware, the Government moved fast to deal with the focus and leadership of the Office for Students. Within weeks of entering office, we accepted in full the recommendations of Sir David Behan’s report on the Office for Students and appointed him as interim chair to begin the work of change that the OfS needs. He will oversee the important work of refocusing the role of the OfS to concentrate on key priorities, including the higher education sector’s financial stability.
While the OfS has statutory duties in relation to the financial stability of higher education providers, the Government also have a clear interest in understanding the level of risk across the sector. That is why my department works closely with the Office for Students, and other relevant parties, to understand the ongoing impacts and changing landscape of financial sustainability. The department will come forward with proposals, as raised by the noble Lord, Lord Willetts, about the potential intervention that might be necessary in the case of real financial crisis for a higher education provider, although we have been clear that our focus will be on protecting the interests of students in those cases.
In the case of freedom of speech, I assure noble Lords that while we have paused the implementation of the Act, we are looking seriously at how we can respond to the challenge of ensuring academic freedom and freedom of speech. We will come forward with proposals soon.
I share the views of those noble Lords who have argued that we need greater transparency, transformation and efficiency within the sector. The most recent report from the OfS on the financial health of the sector makes it clear that the business models of a significant number of providers will need to change in the near future to ensure that they remain financially sustainable. That is why we welcome the commitment that Universities UK has made to establishing a cross-sector transformation and efficiency task force by the end of the year, to seek savings through greater collaboration. I am pleased to see the focus on sector evaluation, shared services and structural opportunities, and look forward to the task force reporting. However, I share the views of the noble Baroness, Lady Barran, and the noble Lord, Lord Lucas, that it should include greater transparency and comparability of the finances of higher education.
Noble Lords have rightly raised the issue of access and participation. The House will note that this is the first area of the Government’s reform programme. My noble friends Lady Blackstone and Lord Griffiths identified the challenge of ensuring that all those who can benefit from higher education are able to. Sadly, the gap in outcomes between disadvantaged students and others from higher education is unacceptably large and widening, with participation from disadvantaged students in decline for the first time in two decades. To support not just disadvantaged learners, but all learners, we need to do more to create a culture of lifelong learning and help everybody to access higher education.
We will expect the sector to work closely with the Government and the Office for Students to tackle these issues, making sure that it is delivering strong and ambitious access and participation plans, and implementing the lifelong learning entitlement to the fullest degree. I reassure the right reverend Prelate the Bishop of Sheffield that we will bring forward the lifelong learning entitlement. In response to the noble Baroness, Lady Garden, I say that this will bring with it some improvement to maintenance for some of the areas that she identified. Of course, that will ensure that both young people and adults, as my noble friend Lady Blackstone argued for, can upskill and reskill in an ever-evolving economy and get the benefit of a lifelong education.
This will also require different forms of delivery. The noble Lord, Lord Rees, argued for this; he is right that we should look at this to enable more students to benefit. The noble Baroness, Lady Grey-Thompson, identified in talking about the Open University some of the really imaginative ways in which it delivers access. We need to learn from that as we take forward the work on access and participation. As the noble Baroness, Lady Bottomley, said, in this area we must be radical and not defensive.
I heard the points of the noble Baroness, Lady Finlay, about the efforts being made by medical schools to increase attainment. I will reflect on the points that she made about the accountability measures and how they might act against broadening access.
We recognise that, for some young people, an apprenticeship is the most appropriate route, and the Government are taking action on that. We also recognise that degree apprenticeships support employers to develop high-level skills and provide valuable opportunities for those who would not otherwise go to university and begin a career that requires a degree. We will work with Skills England to ensure that the level 6 degree apprenticeships are part of the growth and skills levy-funded training offer and continue to offer good value for money while supporting our missions for growth and opportunity.
On the issue of quality, while we can rightly argue that UK higher education is world leading, an engine of growth, supports local communities and breaks down barriers to opportunity, we also need to ensure that this is not compromised by low-quality provision. We want to see higher education providers aspiring to improve the quality of the education that they deliver, far beyond minimum expectations. The noble Lord, Lord Lucas, is right: students make a considerable investment in higher education, and they deserve the highest quality teaching to support them in progressing and achieving to the best of their potential. They also deserve to know what to expect when making this investment, and providers should be clear and transparent about, for example, the number and nature of contact hours that students will have.
Several noble Lords rightly talked about the significance of research for both our higher education sector and our country. The noble Lord, Lord Krebs, raised several questions, as did the noble Lord, Lord Patel, and my noble friend Lady Young. It is of course significant that total government investment in R&D is rising to a record allocation of £20.4 billion in 2025-26. As part of this, core research funding is rising to at least £6.1 billion to offer real-terms protection to the UK’s world-leading research base. That increase will support UKRI to deliver on the UK’s key research priorities. In addition, at least £25 million will be invested in 2025-26 to launch a new multi-year research and development missions programme. This will solve targeted problems and will help to crowd in private and third-sector investment to accelerate delivery of each mission.
The Government have maintained long-term institutional funding for university research and knowledge exchange through quality-related research funding and higher education innovation funding. It will be provided on a recurring basis in order to allow universities to plan over a longer time horizon and smooth out funding fluctuations. Nevertheless, the Government are determined to work with sector to transition to sustainable research funding models. Having said that, as with other areas of work, universities will also need to take their own steps to ensure that they are working as efficiently as possible and, where necessary, make difficult choices.
I noted the point made by the noble Lord, Lord Patel, about doctoral students; perhaps I can come back to him on that. Several noble Lords rightly talked about the civic contribution of higher education providers; they are important not only for learners but for local economies and local communities. There is an array of public benefits to providers engaging with businesses, policymakers and civil society in their local areas, as made clear by the noble Baroness, Lady Prashar, the right reverend Prelate the Bishop of Gloucester, in talking about the University of Gloucester, and the noble Baroness, Lady Grey-Thompson, in talking about the work in Northumbria. This is enormously important work, and we want to promote it as another element of our reform. There are parts of the country where the full civic contribution of providers and their potential to benefit local communities has not yet been unlocked.
We want higher education providers to be civic anchors in our communities and the beating heart of local life in our towns and cities, not ivory towers far removed from local concerns. It is right that they have a role to play in regional and national growth, and we want to work with the higher education sector to maximise that.
I strongly support the comments made about the collaborations between higher and further education. That can be instrumental in improving access for disadvantaged groups to levels 4 and 5, as well as to degrees, and to ensuring that there are clear pathways from further education to higher education. Greater collaboration through local skills systems is also crucial for supporting regional growth and local communities, recognising the different and distinctive roles that different types of providers play regionally and nationally.
We want to ensure that all parts of the country enjoy the benefits of higher and further education collaborations. This will be a key part of our post-16 strategy, where we are exploring how government can foster and encourage stronger relationships and collaboration between higher and further education providers. As part of that, we will make further announcements about how we will allocate the £300 million additional funding that we received for further education in the Budget.
On the issue of international students, I want to make clear the Government’s position. We recognise the vital contribution that international students make; we are committed to a United Kingdom that is outward-looking and welcomes international students. We are conducting a review of our international education strategy to ensure that it continues to reflect the priorities of this Government, including on international students. To the point made by the noble Lord, Lord Willetts, this will be done alongside the Department for Business and Trade and the Foreign, Commonwealth and Development Office.
I will certainly undertake to raise the issue of the speed of visas with my former colleagues in the Home Office. On the point about students within the statistics, it is the independent Office for National Statistics that is responsible for that.
In conclusion, the discussions today have underscored the pivotal role that higher education plays in shaping our nation’s future. We have demonstrated our commitment to sorting the most immediate financial challenges for the sector, but we expect that to be associated with and done alongside a significant programme of reform. We are committed to working collaboratively with Universities UK on that, and its blueprint will help us in this very important task.