Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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The Parliamentary Under-Secretary of State for Education (Janet Daby)
It is a pleasure to speak under your chairmanship, Mr Vickers. I congratulate my hon. Friend the Member for Bedford (Mohammad Yasin) on securing a debate on this important subject. I know he has a keen interest in the financial sustainability of the higher education sector. I have heard my hon. Friend and many Members from all parties speak about the amazing universities in their constituencies, and I welcome all their contributions. I have heard about universities’ contributions to economic growth, systemic issues, operational expenses, home and overseas student numbers, staff redundancies, the deficits that universities carry and many other issues.
I hear and acknowledge the concerns raised. In response, I will address higher education employment; the financial position of higher education; the role of the Office for Students; the tuition fees increase; the risk of financial failure; the sector’s independence; the higher education workforce; higher education reform; international students; research funding; and employer national insurance contributions. I will also address the franchising fraud mentioned by the hon. Member for Reigate (Rebecca Paul).
I thank all the Members who have spoken: the hon. Member for North East Fife (Wendy Chamberlain); the right hon. Member for Hayes and Harlington (John McDonnell); the hon. Members for Dundee Central (Chris Law) and for Strangford (Jim Shannon); my hon. Friend the Member for Colchester (Pam Cox); the hon. Member for Arbroath and Broughty Ferry (Stephen Gethins); my hon. Friends the Members for Edinburgh South West (Dr Arthur), and for Uxbridge and South Ruislip (Danny Beales); the hon. Member for Ceredigion Preseli (Ben Lake); my hon. Friends the Members for Norwich North (Alice Macdonald), for Bournemouth East (Tom Hayes), for Edinburgh South West (Dr Arthur) and for York Central (Rachael Maskell); the hon. Member for Surrey Heath (Dr Pinkerton); and my hon. Friend the Member for Bury St Edmunds and Stowmarket (Peter Prinsley).
I assure my hon. Friend the Member for Bury St Edmunds and Stowmarket that the Government recognise the vital role that clinical academics play in research and education in the NHS. Although universities are independent and, therefore, responsible for decisions around pay, we are committed to working closely with partners in education to ensure that clinical academia remains an attractive career choice.
I thank my hon. Friend the Member for Bournemouth West (Jessica Toale) for her invitation to visit Dorset MPs; I will pass that on to my noble Friend the Minister in the other place, who responsible for skills, higher education and further education. I also thank my hon. Friend the Member for Rushcliffe (James Naish), the hon. Member for St Neots and Mid Cambridgeshire (Ian Sollom) and the hon. Member for Reigate.
As I set out in a similar debate on this topic in December, the Government value the vital contribution that our world-leading higher education sector makes to the United Kingdom. Through education provision and research output, our providers are integral to our economy, industry, innovation and wider society. The sector contributes to productivity and growth, and plays a crucial civic role in local communities. It also helps to enhance the UK’s global reputation.
Of course, higher education providers are vital employers in their local communities and across England. They provide not only jobs for academic staff, such as professors and researchers, but a wide range of non-academic roles in administration, facilities management, IT, student support services and many more.
The Government recognise that the financial position of the sector is under pressure. In November, the Office for Students published an update to its May report on the financial health of the sector. The update states that the financial context for the sector has become more challenging since the May report. By 2025-26, the Office for Students predicts that incomes will be £3.4 billion lower than provider forecasts, and up to 72% of providers could be in deficit if they do not take significant mitigating action. We have heard much about that in the debate.
It is clear that our higher education providers need a secure financial footing to face the challenges of the next decade. I assure Members that we are committed to working in partnership with the sector to put providers on a firmer financial footing than that which we inherited. As has been mentioned, the fact that absolutely no Members from His Majesty’s Opposition are here to speak on this important issue sends a message to universities about how they are valued, or not.
The Government have acted quickly to address the challenges. Last month, Professor Edward Peck was appointed as substantive chair of the Office for Students. Professor Peck will continue the excellent work of the interim chair, Sir David Behan, focusing on the sector’s financial sustainability and increasing opportunities in higher education. In recognition of the pressures facing the sector, in December the Office for Students announced temporary changes to its operations to allow for a greater focus on financial sustainability. It will work more closely with providers that are under significant financial pressure, to protect the interests of students.
Of course the Government have announced that tuition fee limits will increase in line with inflation. As a result, the maximum fee for a standard full-time undergraduate course in the 2025-26 academic year will increase by 3.1%. Fees will increase from £9,250 to £9,535 for a standard full-time course; from £11,100 to £11,440 for a full-time accelerated course; and from £6,935 to £7,145 for a part-time course. This was not an easy decision, but it was the right one to put our higher education sector on a more secure financial footing. In return for the increased investment that we are asking students to make, we expect providers to deliver the very best outcomes for students and the country.
I want to affirm that all providers, regardless of their current position, must continue to adapt to uncertainties and financial risk. Although the Office for Students has statutory duties in relation to the financial sustainability of the higher education sector, the Government have a clear interest in understanding the sector’s level of risk. As well as working closely with the Office for Students, my Department continues to work closely with higher education representative groups such as Universities UK, and with other Government Departments, such as the Department for Science, Innovation and Technology, to better understand the sector’s changing financial landscape.
I also want to make clear the Government’s position on providers that are at risk of financial failure. If a provider was at risk of unplanned closure or, indeed, found itself in the process of exiting the sector, my Department would work with the Office for Students, the provider and other Government Departments to ensure that students’ best interests are protected—students will always be our priority—and to support the university itself as best as possible.
I commend the dedication of staff across the sector during these difficult times. Their hard work and commitment continue to uphold the quality and reputation of our higher education providers. These are undeniably challenging times and we understand that some providers have had to make difficult decisions around staffing to safeguard their financial sustainability. As independent institutional providers, they are responsible for managing their budgets, including decisions about pay and staffing, and the Government do not intervene in these matters, or in disputes between providers and their staff. However, we expect providers to engage constructively with their workforce to identify ways to reduce unnecessary expenditure while ensuring sustainable long-term benefits for both students and the sector as a whole.
Looking ahead, Ministers and officials remain committed to maintaining strong collaborative relationships with employers, staff and unions through continued dialogue. We aim to better understand the challenges facing the sector and to provide support for its evolving needs. Due to the time, it feels like I need to finish, so I will end by saying that this Government are committed to working with universities.