Higher Education: Funding

Baroness Blackstone Excerpts

Wednesday 27th October 2010 Lords Chamber

[Baroness Blackstone]

My Lords, I declare an interest as the vice-chancellor of the University of Greenwich. I should add that I have also spent 10 years in a Russell Group university, 10 years in a 1994 Group university and five years in a specialist institution. I am not saying that I have seen it all, but I have a relatively wide experience of many different types of institution.

I deeply regret, for similar reasons to those of my noble friend Lord Giddens, that I cannot welcome this report. I believe that it is profoundly wrong in the ideological position that it takes and that most, although not quite all, of its recommendations are misconceived. I believe that the quality of its analysis is poor and that many of its claims will not be substantiated when a more rigorous analysis is undertaken of the data on which it draws to make its recommendations. However, I can assure the House that this is not a personal attack on the noble Lord, Lord Browne. I recognise that he took on an immensely difficult task and I am only sad that he and his committee were unable to draw on the resources needed to produce a more convincing report.

It is ironic that this independent review was promised in another place when variable fees were introduced so that after five years the fairness or otherwise of the new system could be examined. At the time, no one could have predicted that such a review would double the fees then proposed and assume that the public funding of 80 per cent of undergraduate tuition would be abandoned. Nor would anyone have predicted that this review would be based on a commitment to the free market that is so extreme that it abandons, to quote Sir Peter Scott, a much respected vice-chancellor and former member of the HEFCE board,

“the very idea of a public system of higher education, built with such care and effort since Robbins”.

For many years, I have believed that students and/or their families should make some contribution to the cost of their university education. However, as my noble friend Lord Giddens has said, it is also the case that higher education brings social and economic benefits to the nation. For that reason it is right that the taxpayer should also contribute. We are all the richer for having highly educated people. The Browne report fails to address this fundamental truth and assumes that the replacement of public grants by fees is a desirable outcome. Many of us beg to differ. When I had some responsibility for the introduction of fees in 1998, they were an addition to public funding, as was the introduction of variable fees in 2004.

There is insufficient time to make all the criticisms that this flawed report deserves, so I will be selective. Although I would like to associate myself with the points made by the right reverend Prelate on the overutilitarian approach of this report, I want to begin with widening participation. The report assumes little or no effect on potential students from low-income backgrounds in doubling the fee debt that they will incur. Because the 1998 and the 2004 legislation did not deter students from poor families from going to university, that does not mean that a fee increase of close to 100 per cent will not do so. The committee is overconfident in asserting that, just because fees are deferred, participation can be protected. Given the much higher costs to be imposed on the individual student, it would be more realistic and in line with elementary economics to assume that a very large increase in prices will lead to a decline in demand.

As the Liberal Democrats went into the election with a pledge not just to hold fees down but to abolish them, I would like to ask those on the Liberal Democrat Benches who are participating in this debate, and the rest of them, how they could possibly support the committee’s proposals on fees. Anyone who wishes to see social justice should be concerned. Perhaps the Minister, too, will tell the House what the Government’s position is, given the potential impact of very high headline fees on young people, as well as on older people without a degree, who are considering going to university. As others have said, the disincentive effect could be very great. That will damage the commitment just made by the Minister to social mobility.

The second issue about which the report is depressingly cavalier is the variable effect of its recommendations on different kinds of university. It appears to be more concerned to increase differentiation between universities and to create a market than to protect the system as a whole and to maintain all our universities. Let me quote from the excellent report by John Thompson and Bahram Bekhradnia, published by HEPI. They said:

“The Committee appears strangely unconcerned with the effects of its proposals on universities whose market position may not be strong and which may not be in a position to sustain even a ‘lower resource’ fee of £6,000. The country needs these universities to thrive and succeed. The reason they may not be strong in the marketplace may have nothing to do with their quality or their standards”.

They went on to say:

“Universities are part of the national infrastructure, and it is in the interests of the country and the responsibility of the government of the day to ensure that universities at all levels of excellence thrive”.

Speaking as a former Minister, I think that this is one of the most regrettable things about the report. Our international reputation is based on strength in depth, variety in research output and a well run system with good teaching in many different kinds of institution. This is one of the reasons why we have been so successful in recruiting international students right across the board. I take issue, as do many vice-chancellors, with the suggestion that universities that are less popular will “raise their game”, to quote from the report, if their student numbers fall, from the threat of going under. As I have suggested, there may be many reasons why they are less popular which have little or nothing to do with the job that they are doing. Again, as the HEPI paper states:

“The national interest would be ill served if they were to fail”.

Moreover, assuming that they survive, why should those universities, with many widening-participation students, end up with fewer resources to teach them, because they cannot charge such a high fee without jeopardising demand? Would we accept that inner-city schools should have less money to teach their students than others? Of course not. Why should we accept that for universities that take those very students from those inner-city schools? I ask the Government—I beg the Government—to ensure that all universities are equally well resourced in their teaching.

Mention should also be made of how the implementation of the Browne report will affect the United Kingdom’s higher education compared with that in other countries. No system in the world has abandoned public investment in undergraduate tuition. No public system charges anything like £6,000 to £7,000 per student. I know many experts in other countries, including the United States—I agree with what my noble friend Lord Giddens said about the US system—who are incredulous that these recommendations can be taken seriously. Moreover, the report’s proposal to have no government-imposed cap is extraordinary. How can any Government abrogate their responsibility to regulate the maximum fee, given the effect that it would have on both access and participation?

We are talking not about washing machines but about a matter of public interest that affects the life chances of many individuals and the nature of our society and economy. Will the Minister make it clear today that the Government will reject the recommendation, as has been signalled once or twice during the past few days? Can she tell the House what the maximum fee will be? Can she also give us a cast-iron assurance that the research-intensive universities will not be allowed to charge a higher fee to undergraduates than other universities? Those fees should be spent on teaching, not on research.

The report is also naive in what it implies about competition and student choice. There is already extensive competition between universities in the existing system: competition for home students, international students, research funding, charitable donations and joint ventures with industry and commerce. The notion that the market will increase competition and allow greater student choice is highly debatable. Choice may in fact become more constrained, because more students than at present will feel that they need to go to their local university to save incurring even larger debts by living away from home. The report accepts that better information will be needed for the market to work, but my experience suggests that, in practice, this will be immensely difficult to achieve and that many potential students will find it difficult either to access or to absorb huge amounts of complex information about what universities are offering.

There are many imponderables in the proposals for repaying the fee and maintenance loans. For example, the Browne report says nothing about the impact on mature students and part-time students. I associate myself with the positive remarks made by other noble Lords about what the committee says on funding for part-time students. The increase in the trigger point for repayments from £15,000 to £21,000 is also welcome. However, the suggestion that some have made—not, I may say, the report’s authors—that that means that many graduates will be relieved from repaying it is surely misplaced. The starting salary of a graduate nurse is £21,500; that of a newly qualified teacher outside London is also £21,500. Even relatively low-paid graduates, such as those in those occupations in the public sector, will have to pay 9 per cent of their salaries immediately on graduating. Some will be paying back over many years while they are struggling with mortgages and bringing up a family.

It would be helpful to hear more from the Government about rates of interest and how they intend to make the system more progressive than the current proposals. Information about when legislation will be introduced is also needed, as the noble Lord, Lord Norton of Louth, said. Can the Minister tell us the likely timetable, as well as indicating whether she agrees that higher fees cannot be announced and introduced until the legislation has cleared the parliamentary hurdles and been enacted? Students cannot apply for places not knowing what the range of interest payments will be when they start repaying. Why are the Government apparently considering a piecemeal approach rather than a carefully considered new higher education Bill that encompasses all the issues that the report raises?

No allowance appears to have been made in the calculations in the report for default. Those figures must be clarified. Will the Government do that? Does the Minister accept that default is likely to be higher when the debt is so much greater? Can she also tell the House how the Government intend to recover the debts of European Union students? A much larger default by those graduates will hardly be fair to British students and graduates and is certainly likely to excite the interest of those parts of the media that are already extremely hostile to the European Union.

The committee’s calculations of the likely cost to the taxpayer of the new fee and loan structures that it proposes are not transparent, because the assumptions made are totally unclear. The experts suspect that they underestimate the costs and that the benefit to the taxpayer from higher fees will be quite a lot less than the £1.8 billion annually that the committee claims. Because the earliest that graduates will start paying back is 2015, the proposed package is likely to lead to higher public expenditure for many years. Can the Minister arrange for some work to be published on the net effects, including details of the Browne committee’s analysis?

I agree with the remarks of the noble Lord, Lord Norton of Louth, on the report’s proposals on reorganising the regulatory system and creating a new higher education council. Those recommendations are not based on thought-through consideration of the issues. It almost seems as if the committee was trying to plug the gap in HEFCE’s work following the drastic reduction in its grant-giving activities. While there is a case for OFFA being absorbed into HEFCE, there is little case for that to happen to the OIA, and a much more careful examination of the pros and cons of having a separate QAA—we must remember that that separation was a recommendation by the Dearing committee—is needed.

Whatever the pressures of the deficit, I ask the Government not to destroy our much admired publicly funded system of higher education by making the changes recommended by the Browne committee, which would do immense damage and be hard to reverse when our economy recovers, as it inevitably will.