Draft Higher Education (Fee Limits and Fee Limit Condition) (England) (Amendment) Regulations 2026
(1 day, 5 hours ago)
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The Parliamentary Under-Secretary of State for Education (Josh MacAlister)
I beg to move,
That the Committee has considered the draft Higher Education (Fee Limits and Fee Limit Condition) (England) (Amendment) Regulations 2026.
It is a pleasure to serve under your chairmanship, Sir John. To begin, I would like to take this opportunity briefly to explain that in the explanatory note for the statutory instrument, there was a discrepancy, in that it stated that the percentage increase for 2026-27 was 2.7% when it should have stated 2.71%, and that the percentage increase for ’27-28 was 2.8% when it should have stated 2.68%. I can reassure hon. Members that a correction slip has been arranged regarding that, and the other figures in the draft SI—the consequential figures in monetary terms—are not affected. The SI, which was laid in draft on 5 February, increases the limits on tuition fees that higher education providers can charge students studying undergraduate courses at “approved (fee cap) providers” in the ’26-27 and ’27-28 academic years.
Our higher education sector is critical to delivering a key mission of this Government—economic growth. It does that through world-leading research and innovation, supporting businesses up and down the country, and by equipping people with the knowledge and skills that they need to thrive. In one way or another, higher education plays a part in the lives of most people in this country, whether through direct participation in university, through research or through its role in our local communities. We are all impacted by universities.
The sector is also crucial to our future prosperity and wealth as a country, but now it is facing severe challenges. Office for Students analysis suggests that without mitigating action, 45% of institutions face a deficit in ’25-26. English providers are attempting to manage significant financial pressures, including the £1.7 billion loss, in aggregate, on domestic teaching and the need for providers to draw on other income to cover it. Such challenges have been unaddressed for far too long, and seven years of frozen tuition fees, plus over-optimistic strategic and financial planning and potential issues with governance, have contributed to the financial challenges facing providers.
The Government have not shied away from these decisions. We started to fix the foundations by increasing fee limits for ’25-26 and boosting the sector’s income, but we must go further if we are to put the sector on a stable footing and provide it with the greater financial certainty that it needs. That can be achieved by boosting incomes, with conditions about improving the teaching quality.
That is why, through this draft SI, we intend to raise fee limits for a further two years. That is necessary to ensure that the sector can face the challenges of the next decade and that students today and in the future can receive a world-class higher education. It will mean that for the ’26-27 academic year, from 1 August ’26 onwards, tuition fee limits for undergraduate courses will increase by 2.71% and, for the ’27-28 academic year, from 1 August ’27 onwards, by a further 2.68%, in line with forecast inflation based on the RPIX inflation index. That means an increase to £9,790 for a standard full-time course in ’26-27 and to £10,050 in ’27-28. It means an increase to £11,750 for a full-time accelerated course in ’26-27 and to £12,060 in ’27-28. The fee limits that apply to lower fee foundation years for classroom-based subjects, such as business, social science and humanities, that begin on or after 1 August ’25 are preserved at ’25-26 levels for ’26-27 and ’27-28.
I recognise that people have concerns about the student finance system and the affordability of higher education. We inherited a broken system and we take borrowers’ complaints seriously. We have already committed to reintroducing maintenance grants and to future-proofing our maintenance support offer by increasing loans for living costs with forecast inflation every academic year from ’26-27. We will continue to look for ways to make the system fairer. The Government are firmly committed to ensuring that access to higher education is based on ability and aspiration, not financial means.
Eligible students can continue to apply for up-front fee loans to meet the full cost of their tuition. Given the inherited fiscal situation, we are making those necessary decisions to protect taxpayers and students. The Government continuously review student finance to ensure that it remains fair, sustainable and supportive of students from all backgrounds.
We have an expectation of the higher education sector too. We expect it to do more to improve access for those from disadvantaged backgrounds, and to focus on efficiency and specialisation to deliver the very best value for students and for the country. We will make future fee uplifts conditional on higher education providers achieving a high-quality threshold through the Office for Students quality regime. That will protect taxpayers’ investment in higher education and reward providers for high quality. We will set out further details on future changes to tuition fee caps in due course.
We are clear that the diversity of the sector is a strength, but each provider needs to be clear on their distinctive role in the system and to move away from a one-size-fits-all approach. Each provider needs to be well run, delivering the very best value for students and operating as efficiently as possible. To conclude, the draft SI will put our higher education sector on a more secure footing, giving it greater financial certainty and therefore enabling it to deliver the world-class higher education that current and future generations deserve.
The Chair
I am minded to allow consideration to continue, notwithstanding the fact that the explanatory note is in effect inaccurate. I appreciate the Minister’s courtesy in correcting that, but in future those things should be done in advance and in writing, and put on the Table so that all members of the Committee can see. I shall be saying to my fellow Chairs that that should be the rule that we adopt. For the convenience of all Members present, I shall now let us proceed with our consideration.
Alicia Kearns (Rutland and Stamford) (Con)
It is a pleasure to serve under your chairmanship, Sir John. I think you were very magnanimous about the inaccuracies in the documents before us.
The real and growing burden on young people already struggling in a difficult labour market will only be added to by the draft regulations. The right hon. and learned Member for Holborn and St Pancras (Keir Starmer), now the Prime Minister, was elected leader of the Labour party on a pledge to scrap tuition fees altogether. The Education Secretary promised graduates that they would pay less under a Labour Government, offering “breathing space”, in her words, at the start of their working lives. Yet in office, Labour has done the exact opposite.
Tuition fees being raised by 3.1% to £9,535 was labelled “economically and morally wrong” by university chiefs. Perhaps the Government will be grateful that the impact assessment makes no reference to the impact on young people. The Government then froze repayment thresholds, an effective tax on graduates that Martin Lewis himself called
“not a moral thing to do”.
This is not breathing space; it is an attack on students.
To add insult to injury, universities did not even benefit, because every penny of those higher fees was wiped out by Labour’s job tax. Now, having already hammered students and graduates, the Government return to do it again, raising maximum tuition fees further to £9,790 next year and £10,050 a year later. That is after the Conservatives froze university tuition fees for eight years. The reality of plan 2 student loans means that millions of graduates’ debt is growing faster than they will ever be able to repay. I see that in my own team—they are looking at fees that go up and up, and at £72,000 or £80,000 of debt. That is something that we must fix. We must reflect on how we got there and ensure that we learn from mistakes and correct them.
David Burton-Sampson (Southend West and Leigh) (Lab)
I find it quite astounding that the hon. Lady is making this statement, given that her party’s coalition Government with the Liberal Democrats almost tripled—tripled—tuition fees to £9,000 in 2012.
Alicia Kearns
Forgive me, but I did not hear a question in that intervention. It is basic courtesy in the House to ask a question in an intervention, but I congratulate the hon. Member on getting some points with the Whips there. If he had listened to my wording, I said that we should reflect and learn from how we got here. I was acknowledging that we must learn when we make mistakes—that is exactly what I just said. He takes me on to my next point, so I thank him for recognising that I said that we must learn from mistakes, but as there was no question, I cannot answer one.
The average plan 2 graduate must now earn £66,000 a year just to begin paying down their balance. Raising the fee cap makes that problem worse, not better. Youth unemployment stands at 16.1%, which is the highest in more than a decade, and higher than the European average; it is the first time our country has been in that place since records began. Graduate recruitment is at a record low, yet the Government’s answer is to load more debt on to young people’s shoulders. That is a betrayal of the young generation.
Young people deserve better than this, which is why the Conservatives are proposing a genuine new deal for young people. We will abolish real interest rates on plan 2 loans so that balances can never spiral beyond inflation again. We will guarantee fully funded apprenticeship places for 18 to 21-year-olds, and introduce a first job bonus to get young people into work and saving for their futures. Martin Lewis said that the Government’s approach is
“not a moral thing to do”
but, in contrast, he has welcomed our plan, and said that it is the right thing to do.
Higher fees without better outcomes is not a higher education policy. It is yet another broken policy from Labour, who are simply burdening young people with more and more debt.
Ian Sollom (St Neots and Mid Cambridgeshire) (LD)
It is a pleasure to serve under your chairship today, Sir John.
I will speak briefly. The Liberal Democrats will not be supporting this draft instrument. We understand why the Government brought it forward: universities are under severe financial pressure and the sector needs sustainable funding. We absolutely accept that problem, but that does not mean that we accept the solution. Our position continues to be that any changes to fee limits must be part of a wider package of reform.
Students deserve to know not just what they will pay but whether repayment terms will be fair, whether the system as a whole will treat them honestly and that the terms will not be changed against them when it is convenient. At the moment, young people can see that those questions do not have satisfactory answers, and that is why we have called for a royal commission on graduate finance to address them properly.
Reform of student finance is only half the picture. We are also clear that fee increases should, in return, come with clear expectations on universities about demonstrable financial sustainability, transparent reporting of how money is spent and accountability on student outcomes. None of that conditionality is on offer here. Asking students to pay more while the underlying system remains unreformed, without clear accountability for how the money is used, is not something we can support.
The Chair
Minister, I assume that the correction slip that you drew the Committee’s attention to is going to be produced and delivered today.
Josh MacAlister
I thank Committee members for their contributions today. I will endeavour to respond to the points made by the hon. Members for Rutland and Stamford and for St Neots and Mid Cambridgeshire, but before I do, let me reiterate the importance of this statutory instrument for putting our higher education sector on a secure financial footing and providing the financial certainty that it needs. I have not heard how either the Conservatives or the Liberal Democrats would propose to do that in the absence of this statutory instrument for the financial years under discussion.
There are few phrases to describe the position of the Conservative party other than “crocodile tears”. The hon. Member for Rutland and Stamford highlighted repayment thresholds. I have not had the chance to look at her speeches or voting record from the time, but from 2012 onward the Conservative Government of the day designed and introduced the very system that she is now criticising. In the year that the system was introduced, they made a commitment not to freeze thresholds but to increase them. However, in their very first year, they froze the thresholds.
Josh MacAlister
I would be delighted to give way if the hon. Lady will answer this question: how many other times were thresholds frozen by that Government?
Alicia Kearns
I do not want the Minister to unnecessarily age me in this debate, so I want to put on record that, unfortunately, I cannot give him that data on my voting record because I was just finishing university then and was still enjoying the joys of life.
Josh MacAlister
I am pleased to hear that that is where the hon. Lady was at that time. The Conservative Government and the Conservative-Liberal Democrat coalition froze thresholds 10 times.
Ian Sollom
The Minister has made that point in several debates. I would just like to explain that the commitment was to raise thresholds from when the first cohort graduated, which was in 2016. That was indeed why Martin Lewis investigated the issue and considered judicial review in 2016. There was no freezing of thresholds prior to that. They were due to rise from 2016. I am sure the Minister did not mean to misinform us.
Josh MacAlister
Certainly not. In fact, the current student loan system—I believe it is plan 5—which is due to come online with the first graduates this year, has been increased in line with inflation by this Government. The point stands that the choice of the Government back then was to maintain the threshold where it was and effectively freeze it, capturing many more people into the system. The cumulative effect of 10 threshold freezes in a decade where inflation was ticking up is being felt by students now.
It is somewhat galling to hear that the Conservatives and Liberal Democrats are outraged that this Government, who were able to find the money to lift the threshold in our first year in office, are now balancing difficult decisions so that we can make sure that we have the funding needed for further education, since over half of students do not go to university and need a well-resourced skills system. Both parties seem now to be walking away from their responsibility to make a system that they designed work effectively, which is unfortunate.
The Committee will know how crucial this sector is for our economic growth—I am sure this is felt across the House. Members will recognise its importance in contributing to research and innovation and the impact that it has on local communities and the lives of students. Challenges in higher education have been left unaddressed for far too long, and providers have suffered a significant real-terms decline in their income.
The Government have not shied away from the decisions that are needed. We took action to raise the fee cap in 2025-26, and we have committed to bringing back maintenance grants and future-proofing maintenance loans for students, but we need to go further so that that our higher education sector can continue to deliver the world-class education and research that this country and future generations deserve.
Dan Carden (Liverpool Walton) (Lab)
I want to make a short intervention, as we may divide on this instrument. Although the Conservatives and Liberal Democrats do not have a leg to stand on in this debate, I have to take issue with the idea that by simply increasing the fee structure, we put universities on a secure and stable footing. They rely on cross-subsidy from international students, and it is widely debated outside this place as to whether the funding model in chaos and crisis.
In the end, we have a stonking great majority in the House of Commons, and we need to be thinking about reform that goes much further so that the university sector is fit for the modern day—especially for the AI revolution that is coming.
Josh MacAlister
I appreciate my hon. Friend drawing the Committee’s attention to the wider debate around higher education funding at the moment. It is true to say that fee income is only one line of income for universities and that they are facing a whole bunch of pressures in a competitive environment. The Government are committed to looking at the student loan system and making it fairer. I have made that commitment, as have the Prime Minister and the Education Secretary.
One urgent point that I would draw the Committee’s attention to is that a number of years of freezes on the tuition fee cap has eroded the income value, which is a significant income stream for universities. If that were to continue, it would further heighten the situation. As a Minister, I have spent time listening to MPs making very powerful representations about the challenges that universities in their constituencies face because of the legacy of the erosion of the value of the fee income. If we were to not increase fees in line with inflation, which is what we are talking about here, it would further add to that funding challenge that universities face. I do not think it would be responsible for us to do that, given that the financial years we are talking about are pretty imminent.
Alicia Kearns
The Minister has opened the box on the topic of funding for universities by mentioning how central that funding is. One of my gravest concerns is the amount of money that is coming from the Chinese Communist party into our universities. Does the Minister believe that by taking this action today, the Government will be able to focus on cracking down on those universities that seem to think there is no problem with taking vast sums from China, which then threatens MPs by saying that it will not take the children of sanctioned MPs at its universities or that it will withdraw all funding from universities if the Dalai Lama speaks at them or there are efforts by Hongkongers or others? Given that the Government are taking action to make sure that universities have a more valid footing, will he make sure that those funding streams are cracked down on?
The Chair
Order. We are not debating how universities are funded by overseas territories, but I will let that go. Minister, you may respond very briefly on that point, and then we will move on.
Josh MacAlister
I am sure that the Committee will be delighted that I will give a short answer, and I can provide a point of reassurance. Of course, universities have responsibility to ensure that they contribute to upholding human rights and freedom of speech, and they have an important role to play in that. We have plans to strengthen their role and responsibility in that respect along with the role of the Office for Students. It is an important point to highlight, even though it is not directly relevant to this SI.
Question put and agreed to.