Higher Education Funding

Baroness Barran Excerpts

Thursday 12th September 2024 Lords Chamber

[Baroness Barran (Con)]

My Lords, I too congratulate the noble Lord, Lord Krebs, on securing this important debate. I add my warm welcome to the noble Lord, Lord Tarassenko, and thank him for his maiden speech—in particular for his insights into the impact of the student finance system on the number of home students doing PhDs in his field.

As we have heard, the challenges facing our higher education institutions are not isolated. They are interconnected with the challenges facing students, taxpayers and, more broadly, the economy. We are rightly proud of our universities and need them to thrive as part of building a path to higher economic growth and prosperity in terms of undergraduate and graduate degrees, and of research.

I was struck by the comments of the noble Lords, Lord Krebs and Lord Rees of Ludlow, and the noble Baroness, Lady Wolf, suggesting that we should perhaps consider a more intentional split between research and teaching. In preparation for this debate I read the paper Triangle of Sadness, produced last year by the vice-chancellor of King’s College London, Professor Kapur, which many of your Lordships may have seen. He made the contrast—I hope I reflect this accurately—between a state such as California, which has a GDP of similar size to the UK and a similar number of universities which are split very much between research, teaching and state institutions. I would be interested to hear the Minister’s reflections on the potential for that in this country.

The last Government tried, in a different way, to encourage collaboration between business, the further education sector and the higher education sector through the institutes of technology, which I hope the new Government will encourage and develop further. I also hope they will build on our record of access and participation for students from disadvantaged areas.

I attempted to make a point in a debate last May—clearly completely unsuccessfully—when we debated the excellent report from the Industry and Regulators Committee on the Office for Students on the risks of making sweeping statements about the financial health of the sector. Despite having failed in May, I will make another attempt today. Both in that debate and today, a number of your Lordships cited the figure of 40% of the sector being in deficit. To put this in context, this is a sector that has grown 50% over the past few years. The OfS report projected a surplus of £2.1 billion for the sector for 2026-27 and a margin of 3.9%. Average borrowing in the sector is 30%. That is not a typical picture of a sector facing impending collapse.

The point I am trying to make is that some universities remain financially very solid and successful. The aggregate deficit of providers in England, referred to in the recent report from the OfS, was just over £330 million, the aggregate surplus of those in surplus was £3.3 billion, and 50% of the aggregate deficit was accounted for by 10 providers. We need to focus on the institutions that are financially fragile, but not to paint the whole sector that way. None the less, obviously, there is a risk that an individual institution could get into serious financial difficulty. I, along with other noble Lords, would find it interesting to hear the Minister’s plans to address that, and in particular, how they plan to protect student interests if it does happen, to ensure that students’ education is not disrupted. 

As for the pressures on students from the affordability of their university education, I absolutely recognise your Lordships’ comments and criticisms of our policy to freeze fees for the last seven years. But, looking forward, I am interested in whether the Minister can update the House on the Government’s plans, and whether they intend to keep the student loan system as we have it today. I cannot quote my noble friend Lord Johnson of Marylebone accurately—but I am referring to the Churchill version.

In her speech to the Universities UK conference last year, the now Secretary of State mentioned

“modelling showing that the government could reduce the monthly repayments for every single new graduate without adding a penny to government borrowing or general taxation”.

I wonder whether the Government still hold that view.

The Minister will be aware that there are Muslim students who have been excluded from higher education because of the nature of the student loan system. Can she confirm that she will continue to meet stakeholders quarterly to ensure that alternative student finance is delivered in a timely way?

We have seen an extraordinary expansion in the number of students in franchised provision, and in universities offering foundation years. I would be interested in the Minister’s reflections on whether those students are getting value for money, and how the Government will ensure that.

I echo the questions from other noble Lords about international students, given that the Office for Students projects that international students will account for 48% of university income by 2026-27. What is the Government’s assessment of the risk to universities from volatility in international student numbers? Obviously, we have seen the depreciation of the Nigerian currency, and the impact on students from that country.

This House has often debated the need for more qualifications at levels 4 and 5, as well as level 6, and of course our further education colleges play an important part in the delivery of those. I wonder what the Minister’s response is to the Association of Colleges report which says that almost a quarter of colleges have waiting lists for qualifications such as engineering, which the economy so badly needs.

The previous Government very much appreciated the support that the current Government gave us when in opposition with the introduction of the lifelong learning entitlement. That is obviously a huge opportunity both financially for universities, because there is a cohort of potential students who could benefit from additional qualifications, and for our economy. I know that the Open University has been calling for those entitlements to be able to be used more flexibly to facilitate the growing demand for accelerated part-time study, and I would be grateful if the Minister could comment on that.

Before I close, I want to pick up very briefly the comments made by the noble Baroness, Lady Fox of Buckley, on the issue of academic freedom and freedom of speech, because that is clearly one of the challenges that our higher education institutions face. I know the noble Baroness committed recently to looking at the Secretary of State’s decision further, but I wonder whether she will take this opportunity to withdraw what felt like an ill-advised statement describing the Act as a hate speech charter, since obviously, as she knows, it does not change people’s rights to free speech under the law but rather gives them easier redress.

We have heard a thoughtful and well-informed series of speeches in your Lordships’ House today, and I look forward very much to the Minister’s reply.