Higher Education and Research Bill

Baroness Goldie Excerpts

Committee: 6th sitting (Hansard): House of Lords
Wednesday 25th January 2017 Lords Chamber

[Lord Stevenson of Balmacara]

My Lords, this group of amendments deals with whether and on what basis the powers of the OfS should be strengthened to ensure that it takes over responsibility for many areas which are currently the responsibility of the Privy Council. I should like to make it clear that I have no particular brief for the Privy Council. I am not a member of it; I have never aspired to it, and I do not know how it operates, although I know it operates in relative secrecy. Having experienced some of the debates around the BBC charter renewal and press standards, I want to make it clear that I am not arguing for the Privy Council. It is probably sufficiently devalued—in the public mind at least—and fallen from grace so as not to be considered the way forward in future. I am arguing in this group of amendments for some level of scrutiny and oversight, reflective of what the Privy Council does at present, to be reinserted into this Bill.

Amendments 339, 340 and 341 reinsert the words “Privy Council” where they have been deleted. In Amendments 342 and 343 and in the whole of Clause 52, there are issues that need to be addressed by the Government in promoting the Bill further on this basis and which I hope will be picked up in debate and discussed.

The correspondence on this matter has been flowing. An issue raised by the Constitution Committee resulted in a letter being sent to the noble Viscount, Lord Younger, on 6 January. It raised questions, the response to which I assume is still in preparation. I have not seen a reply, although the noble Viscount may be able to tell us when he responds to this debate. It asked why a number of powers have been transferred from the Privy Council to the Office for Students. The Delegated Powers and Regulatory Reform Committee has also expressed concern about this and the degree to which the exercise of these powers will, or will not, be subject to parliamentary scrutiny. Indeed, we have discussed these thanks to the interventions of the noble Lord, Lord Lisvane, and other noble Lords on a number of occasions, and there are more to come.

Common to all who have commented on this issue is how removing powers from the Privy Council will, in effect, remove them from the oversight of a body that is independent of and separate from Parliament. In some senses, it can be regarded as being cross-party. It behoves those who wish to support the line of argument that I am taking to make suggestions as to how this might be resolved. It seems that the Office for Students is to be the all-singing, all-dancing regulator, both validator and remover of degrees—as we have just discussed—guardian of the flame and operator of all the functions relating to higher education. If this is so, it must not be given responsibilities which cannot be checked and covered if decisions are taken which are not appropriate. There must be some sort of appeals system. Its advice to the sector and to Ministers should, on occasion—and this will be relatively slight—be subject to the will of Parliament. The question is how.

The Privy Council stands as a surrogate for a process which requires Ministers and their advisers—in this case, the Office for Students—to defend the decisions they take in a way which at least opens them to wider scrutiny. I do not see—and it will be for the Minister to convince us if this is wrong—any position within the arrangements currently laid out in the Bill which will satisfy the high standard that the Privy Council is intended to confer on this mode of scrutiny. I beg to move.

[Baroness Goldie (Con)]

My Lords, let me first reassure your Lordships that we absolutely agree that a university title is valuable and prestigious, and that a university’s reputation needs to be protected. I am grateful for the opportunity to set out how we want to do this. I thank the noble Lord, Lord Stevenson, for raising some genuinely interesting points which I shall try to address.

As regards Clauses 51 and 52, currently there are three main legislative routes for English higher education providers to obtain university title. Two of these require consent of the Privy Council. The other requires consent of the Secretary of State under the Companies Act to the use of the word “university” in a company or business name. While the criteria are the same for all routes, in general publicly-funded higher education providers obtain university title from the Privy Council. Alternative providers can currently use only the Companies Act route. This creates a slightly complex and certainly inconsistent situation. The Government want to achieve the position whereby the OfS is able to grant university title to all providers. Clauses 51 and 52 achieve this by making changes to the two Privy Council routes by transferring the responsibility for consenting to the use of university title to the Office for Students. This transfer to the OfS will not lower standards. We believe the reforms will continue to ensure that only the highest-quality providers can call themselves a university. That is because we are not anticipating wide-ranging changes to the criteria. As now, we want any institution that wants to call itself a university to demonstrate that it has a cohesive academic community and a critical mass of HE students. This means that there will continue to be a distinction between universities and other degree- awarding bodies. That is not changing.

I endeavour to reassure the noble Lord, Lord Stevenson: we envisage that providers will be eligible for university title only if they are registered in either the approved or the approved fee cap category, and have undergone strict financial sustainability and quality checks; have over 55% of full-time equivalent students studying HE; and have successfully operated with full degree-awarding powers for three years. As we do now, we intend to set out the detailed criteria and processes for obtaining university title in guidance, and we plan to consult on the detail of this before publication. The OfS will make awards having regard to this guidance, just as the Privy Council does now. I make it clear that we want this to be a high bar, designed to ensure that the reputation and prestige of being an English university are maintained. That is in the interests of the whole sector. The term “university” will, of course, remain a sensitive word under the Companies Act, which means that it cannot be used in a business or company name without the appropriate consent.

I know there are some concerns that our reforms would open the door to low-quality or even bogus universities. That would be a very unwelcome prospect. However, I submit that the protection of the word “university”, along with all the safeguards I have just outlined in relation to obtaining university title, are designed to ensure that this could not happen.

I turn to the amendments that relate to the role of the Privy Council. As I said, we intend to keep the broad structures for the award of university title—that is, a decision which is made independently, having regard to published guidance. At present, providers send their application to HEFCE, which advises the department, which in turn advises the Privy Council, which then rubber-stamps a decision. This is unnecessarily complex. It is legitimate to ask the question posed by the noble Lord, Lord Stevenson: what is the role of the Privy Council in this context? That is an important question. A briefing paper of the Library of the House of Commons describes the Privy Council, in this context, as,

“effectively a vehicle for executive decisions made by the Government”.

We have investigated and cannot cite a single case in recent memory where the Privy Council disagreed with a recommendation by the department.

I hope I have been able to explain that we are not planning to change the independent decision-making and scrutiny, nor the core of what it means to be a university. I therefore suggest that the amendments proposed by the noble Lord, Lord Stevenson, are not necessary and in these circumstances I ask him to withdraw Amendment 339.

[Lord Stevenson of Balmacara]

My Lords, I thank the Minister for her contribution. I am glad to see that she has got over her sore throat and it is not worse than at our last meeting so she is in full voice again. I am a bit confused about quite where that answer took us. I welcome the candour with which a Minister of the Crown has spoken about the role Ministers play in relation to royal charter achievements. The idea that the Privy Council has never turned down a Minister’s recommendations is exactly the point that many of us were making in relation to the BBC. The former chairman is sitting there, looking as if he is about to leap to his feet and comment on this matter—I am sure he will at a later stage.

[Baroness Goldie]

My Lords, I was very careful and quite specific in the expression of my description of the Privy Council in the context of this Bill.

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[Baroness Brown of Cambridge (CB)]

My Lords, this amendment stands in my name and that of my noble friend Lady Wolf. It would limit the powers of entry and search to suspected breaches of registration concerning fraud and serious financial mismanagement of public funds. The relationship between the Office for Students and registered providers is basically a civil one, and indeed in many areas a supportive one, and criminal proceedings such as search and entry should clearly be used only in cases of very serious misconduct, as specified in the amendment.

I recognise that paragraph 1(3)(b) of Schedule 5 says that,

“the suspected breach is sufficiently serious to justify entering the premises”,

and I am sure that the intent is that powers of entry would be used only in exceptional circumstances. However, this part of the Bill has been described by the sector as draconian, and the amendment, in effectively defining what constitutes “sufficiently serious” breaches, would provide considerable reassurance to the sector. I beg to move.

[Baroness Goldie]

My Lords, I thank the noble Baroness for her contribution. Clause 56 and Schedule 5 as drafted will ensure that the Office for Students and the Secretary of State have the powers needed to investigate effectively if there are grounds to suspect serious breaches of funding or registration conditions at higher education providers. The amendment recognises that these powers are necessary where there are suspicions of fraud, or serious or wilful mismanagement of public funds.

As the noble Baroness indicated, we would expect the majority of cases where these powers would be used to fall into this category, but limiting the powers to this category would risk compromising our ability to investigate effectively certain other cases where value for public money, quality, or the student interest is at risk.

The OfS may, at the time of an institution’s registration or later, impose a “specific registration” condition. This is a key part of our risk-based regulatory framework. For example, an institution with high drop-out and low qualification rates could have a student number control imposed by the OfS if it considered that this poor level of performance was related to recruiting more students than the institution could properly cater for.

A breach of such a condition may not constitute fraud, or serious or wilful mismanagement of public money, as students will still be eligible to access student support. But there is a very real risk that students, quality, and value for public money will all suffer. If the OfS has reason to believe that despite, for example, the imposition of a condition that limits the numbers of students a provider can recruit the provider is nevertheless undertaking an aggressive student enrolment campaign, it will be important that evidence can be swiftly secured to confirm this. If the proposed amendment were made, a warrant to enter and search may not be granted in such cases. That would be an unfortunate and perhaps unintended deficiency in these important powers. I therefore ask the noble Baroness to withdraw Amendment 364.

[Lord Mackay of Clashfern]

Before my noble friend sits down, I was wondering whether the justice of the peace who is to decide such a matter has to give a certificate that he has been satisfied on all the matters required in the schedule at this point in order to grant the warrant, because it sets out conditions about which he must be satisfied. I think it would be quite a reasonable requirement that before the warrant was granted, he should certify that he—or she, I should of course have said—is satisfied on each one of all those rather important conditions.

[Baroness Goldie]

I thank my noble and very learned friend for his contribution. I cannot comment on the specifics of the operation of magistrates’ warrants in England, but I certainly can undertake to write to him with clarification as to how—a very large piece of paper has just been handed to me, entitled, “What will the magistrate take into account when considering whether to issue a search warrant?” If your Lordships, like me, are agog to know this riveting information, here we go.

The magistrate would need to be satisfied on the basis of the written evidence and the questions answered on oath that reasonable grounds existed for suspecting a serious breach of a condition of funding or registration, and that entry to the premises was necessary to determine whether the breach was taking place. Further to this, the magistrate would also need to be satisfied that entry to the premises was likely to be refused or that the purpose of entry would be frustrated or seriously prejudiced. These criteria will ensure the exercise of the power is narrowly limited.

Well, as FE Smith once famously said to a judge, I may not be any wiser, but I am much better informed.

[Lord Mackay of Clashfern]

My Lords, I am grateful for that, but of course it does not deal with the question that I am asking. It is very useful information—or rather, I think I am right in saying that, at least so far as I followed it, it is a repetition of what is already in the Bill. The question, however, is whether the magistrate needs to be aware that these are the conditions. When applications for warrants are dealt with, the degree of speed required sometimes slightly derogates from the detail in which they are considered. This is an important matter: if a higher education institution has a search warrant on its premises that is a pretty damaging thing, especially if it happens to come out in the press that a highly regarded senior institution is being subjected to a search of its premises, which may be quite large, when it comes to it.

It would be useful to have a requirement that the magistrate should certify that he or she is satisfied on these matters and grants the warrant accordingly, or something like that.

[Baroness Goldie]

My Lords, I totally defer to my noble and learned friend on these matters. I do not have the technical information that he seeks, but I undertake to write to him.

[Baroness Brown of Cambridge]

I thank the Minister for her detailed reply. I am not sure I understand what the grounds for search and entry in the case of a risk to quality might be. Indeed, as an engineer not a lawyer, I feel that taking a large number of students who you had been told you could not take when they were supported by government loans could count as wilful mismanagement of public funds, but I am sure others have a better understanding than I have.

However, when there is time, I ask the Minister to reflect that some of the clauses in the Bill seem rather draconian powers for a regulator whose general tone is about supporting the system to prosper and grow. But at this point, I beg leave to withdraw the amendment.

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[Lord Lucas]

My Lords, many of the providers which will come under this Bill are operating with similar qualifications in other markets and countries. I thoroughly approve of this clause and what it aims to do, but the providers deserve the same level of confidentiality from researchers as they get from regulators. I beg to move.

[Baroness Goldie]

My Lords, I thank the noble Lords, Lord Stevenson and Lord Lucas, and the noble Baroness, Lady Wolf, for raising these important issues.

The amendments seek to limit the power of the OfS or someone working on its behalf to carry out efficiency studies on HE providers under Clause 63. I assure the noble Lord, Lord Lucas, that we entirely accept the principle of what he is seeking to achieve here. For many providers on the register the teaching of higher education will be just a part of their overall business. Many providers will also carry out other activities, such as offering corporate conference facilities or operating sports facilities which the public can access.

Let me also assure my noble friend that the Government would not want the OfS to look at the efficiency of those other activities. Instead, the Government would expect the OfS to confine its efficiency studies to providers’ HE teaching activities. I accept that the Bill does not explicitly limit the OfS’s efficiency studies power in the way my noble friend seeks but we do not think that these amendments would achieve that laudable end. They seek to link the OfS’s efficiency studies power to those activities which are subject to the contract between the OfS and the provider relating to the provider’s registration. A provider’s registration, however, is not subject to a contract.

The Bill is not, though, entirely silent on how the OfS should carry out its functions. I point to the general duties this Bill places on the OfS in Clause 2(1)(e), which requires the OfS to,

“use the OfS’s resources in an efficient, effective and economic way”.

Furthermore, Clause 2(1)(f) places a duty on the OfS to have regard to,

“the principles of best regulatory practice, including the principles that regulatory activities should be … transparent, accountable, proportionate and consistent, and … targeted only at cases in which action is needed”.

Let me also assure my noble friend that individuals conducting efficiency studies on behalf of the OfS will be subject to the same confidentiality requirements as the OfS.

I hope that these latter points provide my noble friend with some reassurance that the OfS will carry out its efficiency studies in the focused way he seeks to achieve. This level of focus is certainly something the Government want to see. In these circumstances I ask him to withdraw Amendment 416.

[Lord Lucas]

My Lords, I am very grateful to my noble friend for that explanation, which I shall go away and chew over. It is not that the university might be running a tiddlywinks club for money that worries me, but that it may well be selling the same higher education product as commercial training outside the university sector, or internationally online. These are both money-making activities where the university is concerned about commercial confidentiality but, under the Bill’s current wording, researchers might be asked to look at and gather data on them.

I shall have to do some work between now and Report, but I hope the Government will look again at what I have said today. I beg leave to withdraw the amendment.

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[Baroness Goldie]

My Lords, it is the Government’s intention that the OfS’s running costs will be shared between the sector, in the form of registration fees charged on registered providers, and government. The Bill enables this, granting the OfS the power to charge fees to cover the cost of its functions, with the detail of those fees to be set out in secondary legislation following proper consultation with the sector. That consultation is now open.

Moving to a co-funded model will be more sustainable, bringing the approach to funding the OfS in line with that of other, established regulators, such as Ofgem and Ofcom. It also reflects current practice in sector-owned bodies, including HESA and the QAA. Asking providers to contribute will strengthen their incentive to hold the OfS to account and challenge its efficiency. To reassure your Lordships, the total amount of funding raised by fees would represent less than 0.1% of the annual income that the sector generates.

Turning to Amendment 423, I thank the noble Lord, Lord Stevenson, for his thoughtful contribution. Let me assure him that the fees consultation seeks views on guiding principles in relation to areas where the Secretary of State may provide supplementary funding to the OfS. This could include funding to cover set-up costs and elements of its running costs. If we were to specify this in legislation, however, in the way that the amendment does, it would inadvertently prohibit the Secretary of State from giving money to the OfS to distribute as teaching grant.

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[Lord Stevenson of Balmacara]

I support the amendment and endorse everything that the noble Baroness, Lady Wolf, said in introducing it. She hit the nail on the head very firmly. There are issues around new providers. There is not very good evidence, and the evidence that there is seems to be anecdotal rather than scientific. The information published recently by HEPI threw doubt on whether many of the institutions that have come forward were bona fide or would survive, and some questionable practices were exposed—so there is an issue there.

In addition to the points that the noble Baroness made, which I endorse, there is, again, a gap in the centre of what the Office for Students is being established to do. It could have been imagined—pace the points made by the noble Lord, Lord Willetts, about not wanting to overload the OfS—that it would have a responsibility to speak for the sector to the Secretary of State about the gaps that it may see in provision, and the issues that may need to be picked up in future guidance. I would have expected that to be the normal thing.

However, it is interesting to see that the general duties in Clause 2 do not cover it. They are all about functions to do with quality, competition, value for money, equality of opportunity and access. They are nothing to do with surveying and being intelligent about the future and how it might go. However, as the noble Viscount, Lord Ridley, said, the game may have changed a bit now with the publication of a strongly worded industrial strategy—or at least, we hope it will turn into an industrial strategy after the consultation period. Out of that will come a requirement to think much harder about the training and educational provision that will support and supply the industrial machine that we will need as we go forward into the later parts of this century. It therefore makes sense to have advance intelligence about this, and to recruit from those who have expertise. It makes even more sense to do that in the way suggested by the amendment.

[Baroness Goldie]

My Lords, we agree that it is necessary to have a holistic overview of the sector to understand whether our aim of encouraging high-quality, innovative and diverse provision that meets the needs of students is being achieved. However, I do not agree that to achieve this an independent standing committee is necessary. There are already a number of provisions in the Bill that allow the Secretary of State, the OfS and other regulatory or sector bodies, where necessary, to work together to consider these important issues.

For example, Clause 72 enables the Secretary of State to request information from the OfS, which, as the regulator, will have the best overview of the sector. Clause 58 enables the OfS to co-operate and share information with other bodies, and, as we have discussed at length, the Secretary of State can give guidance to the OfS to encourage this further.

We have already debated the issue of new providers at length, but let me reiterate that there is a need for new innovative providers. The Competition and Markets Authority concluded in its report on competition in the HE sector that aspects of the current system could be holding back greater competition among providers and need to be addressed. In a 2015 survey of vice-chancellors and university leaders, 70% expected higher education to look the same in 2030. This risks becoming a self-fulfilling prophecy.

We must not be constrained by our historical successes, because if we place barriers in the way of new and innovative providers we risk diminishing the relevance and value of our higher education sector to changing student and employer needs, and becoming a relic of the last century while the rest of the world is moving on.

[Baroness Wolf of Dulwich]

I do not think that the amendment was proposing barriers of any sort. We need to be clear about that. It does not propose barriers in aid of diversity. It just says that simply removing barriers to entry would not deliver diversity. I apologise if that was not made clear.

[Baroness Goldie]

I thank the noble Baroness for her intervention. I fully accept that the express text may not have intended that—but we have to look at what the consequences of this new independent committee would be, and infer from that what effect it might have on the broader sector.

At the moment we have a university sector that needs to do more to support its students and the wider economy: it has built up over time to serve only parts of the country; it is not providing employers with enough of the right type of graduate, especially STEM graduates; it can do more to offer more flexible study options to meet students’ diverse needs; and it can to do more to support social mobility. It is not enough simply to ensure that all young people with the potential to benefit have a theoretical opportunity to go to university and secure a good job when they graduate.

Alternative providers are already supporting greater diversity in the sector: 56% of students at alternative providers are aged 25 or over, compared with 23% of students at publicly funded institutions. They also have more BME students: 59% of undergraduate students at alternative providers are from BME groups, compared with 21% at HEIs.

The Government are determined to build a country that works for everyone. That is why we have announced a number of opportunity areas that will focus their energy, ideas and resources on allowing children and young people to fulfil their potential. That, in conjunction with what the Act sets out to achieve—the broad vision that I think universities accept as positive for the sector—holds out hope that we are proceeding on a journey in which we can have a lot of optimism and confidence.

I note the references to skills and would stress that we are carrying out reform programmes in higher education and in technical and vocational education at the same time. This gives us the opportunity to ensure that these programmes of reform are complementary. The Government’s recently published Green Paper on an industrial strategy outlines further our vision for skills and a system that can drive increases in productivity and improvements in social mobility. We are committed to reforms that will improve basic skills, create a proper system of technical education, address regional skills imbalances and shortages in STEM skills, and make it easier for adults to retrain and upskill in later life.

One of the 10 pillars of the industrial strategy is that we will create the right structures and institutions to support specific places and sectors. In some cases, this will mean strengthening existing educational institutions or creating new ones. We recognise the need for accurate information to identify and address current and future skills shortages, and we will work towards a single authoritative source of this information. To ensure a joined-up approach, the OfS’s ability to co-operate with a range of other bodies, including the Skills Funding Agency and the Institute for Apprenticeships, will be important. Clause 58 enables that.

The important issue of part-time education was raised. The Government agree that part-time education, distance learning and adult education bring enormous benefits to individuals, the economy and employers. Our reforms to part-time learning, advanced learner loans and degree apprenticeships are opening significant opportunities for mature students to learn. The OfS must—it is not a question of should, or if it feels like it—have regard to the need to promote greater choice and opportunities for students, and to the need to encourage competition between providers where that competition is in the interests of students and employers. That is alongside the other practical support that the Government are already giving for part-time students, including providing tuition fee loans where previously they were not available. We have also recently completed a consultation on providing, for the first time ever, part-time maintenance loans. We are now considering options. The Bill already provides for the mechanisms to enable the kind of information referenced here to be gathered effectively. I hope my remarks have reassured the noble Baroness, and I therefore ask her to withdraw her amendment.

[Lord Mackay of Clashfern]

Would it be worth considering inserting the phrase from this amendment,

“emerging needs for new providers within the higher education sector”, into the general duties of the OfS in Clause 2? It might well be a mechanism for this being studied.

[Baroness Goldie]

As ever, my noble and learned friend makes a significant suggestion. I undertake that we shall reflect on that.

[Lord Adonis (Non-Afl)]

I observe that a whole section of Schedule 1 relating to the Office for Students concerns committees. Paragraph 8(1) states:

“The OfS may establish committees, and any committee so established may establish sub-committees”.


This appears to be a power without limitation. The noble Baroness not only can have her committee on new providers; she can have a range of sub-committees as well. We could spawn a whole bureaucracy around the provision of new providers. One hopes that, at the end of it, we will actually get some new providers and not just committees. In one of the many letters she is sending us, I wonder if the Minister could confirm that, under that power, it would be perfectly possible for the OfS to establish a committee for the purposes that the noble Baroness and the noble Viscount have in mind.

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[Baroness Goldie]

I thank the noble Lord for his intervention. He is quite correct that the schedule does indeed empower the OfS to set up committees. It is anticipated that that would be an important source of information to the OfS. I am happy to endeavour to clarify the position, as he seeks, and we will send a letter to him.

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Moved by

[Baroness Goldie]

438: Clause 80, page 50, line 42, at end insert—
“(ha) in relation to England, for contributions made in respect of an alternative payment to be dealt with, with the consent of the Treasury, otherwise than by payment into the Consolidated Fund;”

[Baroness Goldie]

My Lords, the Government want to make this a country that works for everyone. That is why we have introduced Clauses 80 and 81 of the Bill. Amendments 438 and 439 simply clarify the role of Treasury consent in establishing a system for alternative payment contributions to be dealt with other than by payment into the consolidated fund. They are narrow and functional amendments.

I know that the noble Lord, Lord Sharkeys has a considerable interest in the introduction of alternative student finance as provided for in Clauses 80 and 81. I beg to move.

[Lord Sharkey (LD)]

My Lords, I will speak to Amendment 442 in my name and that of my noble friend Lord Willis. The Committee will know that sharia law forbids interest-bearing loans. That prohibition is a barrier to Muslim students attending our universities. This has been a problem for the Muslim community in this country since at least 2012. Prior to then, many Muslim students were able to attend university because they were financed by family and friends. This was possible when tuition fees were low, but it is much more difficult with fees at their current levels. Successive Governments have known about this problem. They have recognised that the current system effectively discriminates against devout Muslims for whom interest-bearing loans are not acceptable.

The system works to the direct disadvantage of our Muslim communities. Many Muslim students, although qualified, cannot progress to tertiary education. The system also works to the disadvantage of our society as a whole. An important part of the community is effectively deprived of access to higher and further education, of the opportunity to mix with others and to learn from and contribute to our culture. These are damaging and dangerous exclusions. They are also completely unnecessary.

In April 2014, BIS launched a consultation on possible sharia-compliant ways of financing students. This consultation generated an astonishing 20,000 responses. The consultation outlined the proposed solution, based on the widely used Islamic finance instrument, called a takaful. In their response to the consultation, the Government said:

“It is clear from the large number of responses … that the lack of an Alternative Finance product as an alternative to conventional student loans is a matter of major concern to many Muslims”.


The response went on to say:

“There is demand for the proposed Alternative Finance product and responses to the consultation indicate that this would enable many of those who have been or will be prevented from undertaking both FE and HE, to attend by removing the conflict between faith and funding”.


The Government’s conclusion was equally clear; they said that,

“the Government supports the introduction of a Sharia-compliant Takaful Alternative Finance product available to everyone”.

But there was a cautionary addendum:

“Given the complexity of these issues and the time needed to resolve them, it is unlikely that any Alternative Finance product could be available before academic year 2016/17”.


That was written in September 2014—two and a half years ago—and only now is enabling legislation before us. If that sounds like criticism I should say immediately that I warmly congratulate the Government and Jo Johnson on finally producing the legal framework to solving the problem. It is a vital step forward, but it has one major defect. The Bill is silent as to when the takaful scheme will be in place. We are already in academic year 2016-17. We are too far into the year for any scheme to affect the 2017-18 intake and, worse, I have been told privately that it is likely that the scheme will not be ready until the academic year 2019-20. That is seven years after the problem was recognised, five years after the solution was agreed, and two academic years away from now. If that is correct, it means that Muslim students will continue to be discriminated against and disadvantaged for another two years; another two cohorts of young people who are unable to attend university.

My Amendment 442 addresses the problem directly. It simply requires the takaful scheme to be in place to benefit students going into further education or higher education in the autumn of 2018. I have tried to get to the bottom of why there might be this extended delay of five years between agreeing a solution and putting it into practice. I have consulted with Islamic finance experts and people familiar with the operational requirements involved in introducing a takaful scheme. I am told that, with the necessary political will, a working takaful system can be put in place within eight to 12 months, and that assumes that no significant work has already been done. That is why I have chosen the deadline of academic year 2018-19.

I am also told that the reason for the very likely prolonged delay that would otherwise occur is not lack of good intentions but the inability of the Student Loans Company and HMRC to organise themselves to deliver the product in a reasonable time. People I have talked to speak of a lack of resource in both agencies and an inability to process additional work in a reasonable time. A timetable that leads up to autumn 2019-20 is not reasonable and not necessary, especially when there is precedent for moving a lot faster. For example, the Sharia-compliant version of the Help to Buy guarantee scheme took five or six months, from the beginning, to develop and launch. These things can be done in good time, if there is the will and the allocation of the required resource. When the Minister responds he—or she—may say that the takaful scheme will in fact be in operation for the academic year 2018-19. If the Minister does say that, it will be heard, noted and welcomed as a commitment by the Muslim community and Muslim students, who will at last be able to go on to university. If he does that make that commitment to the Muslim community and to Muslim students I will not press my amendment.

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[Lord Watson of Invergowrie]

My Lords, it is very much to be welcomed that Muslim students are to be offered Sharia-friendly student loans which should assist in applying to university, although I accept the point of the noble Lord, Lord Willetts, that only some students have been put off in the past in the belief that taking out a loan conflicts with their religious beliefs.

This is certainly a big step forward, but as the noble Lord, Lord Sharkey, outlined, when will it happen? He has traced the path that has been followed since 2012, when a government commitment was first made. As he said, the consultation exercise was undertaken and the Government responded in September 2014—quite quick for government replies. Their response said that,

“the Government supports the introduction of a Sharia-compliant takaful alternative finance product available to everyone, and will work on its development”.

That response also mentioned the need to find what was described as an “appropriate legislative window”. Two years on—more than that, in fact—we are at that window, yet we do not have a date for the commencement.

Amendments 442 and 516 in the names of the noble Lords, Lord Sharkey and Lord Willis, appear to me to be rather contradictory. Amendment 442 calls for the scheme to begin in the autumn of 2018, while Amendment 516 seeks its introduction immediately after the Bill becomes law, but no matter. We wish to see the scheme introduced as soon as it is practical, and I trust the Minister will outline the timescale that the Government have in mind. In particular, I hope they will offer some explanation if, as the noble Lord, Lord Sharkey, said, they suggested that a delay would be necessary until 2019. I found it very interesting that the noble Lord, Lord Sharkey, said that he had consultations with people in the Muslim community who said that it need not take that long, so we look forward to the Minister’s response on this important matter.

[Baroness Goldie]

My Lords, the debate has been helpful. I think we all agree that participation and choice in further and higher education must be open to everyone with the potential to succeed, irrespective of their background, gender or religion. I thank the noble Lord, Lord Sharkey, for a sensitive and reflective contribution to that debate.

The Government recognise that, under the current system, there are concerns that some prospective Muslim students may feel deterred from accessing student loans; we appreciate that they might consider that student loans are not consistent with the principles of Islamic finance. Our research has suggested to us that Muslim students are less likely to use student loans than their contemporaries. That is why the Government have introduced Clauses 80 and 81, which are ground-breaking and innovatory and set out our intention to provide the Secretary of State with the power, for the first time, to offer alternative payments alongside existing powers to offer grants and loans. We are the first Government to legislate to make alternative student finance possible, and we have legislated at the first opportunity. We are fully committed to making alternative student finance available.

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[Baroness Royall of Blaisdon (Lab)]

My Lords, I broadly support, in particular, Amendment 446, tabled by my noble friend Lord Watson. Opportunistically, however, I ask the Minister, since we are discussing student fees, when there will be clarity vis-à-vis student finance for EU students who want to register for courses in 2018-19. They have no clarity at the moment, and this is putting some EU students off even thinking about applying to UK universities.

[Baroness Goldie]

My Lords, I thank noble Lords for their contributions. I am aware that this is an issue that stimulates debate and the contributions have been genuinely informed and reflective.

When the Government reformed student finance in 2011 we put in place a sustainable system designed to make higher education accessible to all. It is working well, because total funding for the sector has increased and will reach £31 billion by 2017-18. These amendments cover a number of areas of the student finance system.

I refer first to the issue of the student loan repayment threshold. The decision to freeze the repayments threshold for post-2012 loans was taken to put higher education funding on to a more sustainable footing. To do this, we had to ask those who benefit from university to meet more of the costs of their studies. I thank my noble friend Lord Willetts for providing a very clear explanation of the threshold freeze and the circumstances that led to it. Freezing the threshold enabled us to abolish student number controls, lifting the cap on aspiration and enabling more people to realise their potential.

On average, graduate earnings remain much higher than those of non-graduates. Students continue to get a fair deal: the current threshold remains £3,500 higher than that for pre-2012 loans. Uprating the threshold in line with average earnings would cost around £5 billion in total by April 2021 compared to the current system. The total cost of uprating by CPI would be around £4 billion over the same period. Taxpayers—many of whom will be non-graduates earning much less than the graduates who would benefit—would have to bear that cost.

On the matter of student loan terms and conditions, I share your Lordships’ desire to ensure that students are protected. That is why the loan terms are set out in legislation. However, it is important that, subject to parliamentary scrutiny, the Government retain the power to adjust terms and conditions. Student loans are subsidised by the taxpayer, and we must ensure that the interests of both borrowers and taxpayers continue to be protected. This amendment would also prevent the Government making any changes to the loan agreement that would favour the borrower. Finally, we believe that the Government should continue to be able to make necessary administrative amendments to the terms and conditions to ensure that the loans can continue to be collected efficiently.

With regard to the replacement of maintenance grants with loans, I reassure noble Lords that this Government remain committed to increasing access to higher education. Indeed, the proportion of students from disadvantaged backgrounds entering higher education has increased from 13.6% in 2009 to 19.5% in 2016. We have, furthermore, increased support for students on the lowest incomes by over 10%. Reinstating the system of maintenance grants would reduce the up-front support available for students from some of the most disadvantaged backgrounds, while costing the taxpayer over £2.5 billion each year. Students recognise the value of a degree. Lifetime earnings are, on average, higher for graduates than non-graduates and it is right that students who earn more contribute towards the cost of their education. Repayments are related to the ability to pay and start only when a borrower is earning £21,000.

I turn now to the amendments relating to the regulation of student loans. I agree that it is important that students are protected. However—as my noble friend Lord Willetts set out—student loans are not like commercial loans: we must remember that. They are not for profit and are available to all, irrespective of their financial history. Repayments depend on income and the interest rate is limited by legislation. The loans are written off after 30 years with no detriment to the borrower. The key terms and conditions are set out in legislation and are subject to the scrutiny and oversight of Parliament. This means that additional regulation is unnecessary.

Lenders regulated by the FCA are obliged to assess the creditworthiness of all their borrowers, and the affordability and suitability of the loan product for each borrower. Were the Financial Conduct Authority to regulate student loans—as Amendment 449 seeks—it could affect the ability of some students to obtain them. My noble friend Lord Willetts spoke powerfully about that.

Our system allows the Government, through these subsidised loans, to make a conscious investment in the skills of our citizens. I hope that this addresses the concerns raised by noble Lords and I therefore ask that Amendment 444 be withdrawn.

[Baroness Garden of Frognal]

My Lords, I thank the Minister for her detailed response. I bow, of course, to the remarks of the noble Lord, Lord Willetts. I remember working with him in coalition when I was Higher Education Minister in the Lords—heady days indeed.

In spite of his reassurances, I am still concerned that the less well-paid and less privileged students should not be disproportionately penalised or deterred by repayments. After all, they repay for longer than the better-paid students, and there are problems in that. I also support the amendments of the noble Lord, Lord Watson. I think that the noble Baroness, Lady Royall, will find that we may touch on those issues when we come to the amendments on international students. She makes, however, a very valid point that needs consideration. At this stage, however, and in the light of the Minister’s remarks, I beg leave to withdraw the amendment.

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Moved by

[Baroness Goldie]

450: Clause 83, page 53, line 13, at end insert—
“( ) in the words before paragraph (a), omit “in England or Wales”,( ) in the opening words of paragraph (a)—(i) after “university” insert “in England or Wales”, and(ii) after “the 1992 Act” insert “or section 37 or 87 of the Higher Education and Research Act 2017 (“the 2017 Act”)”,”

[Baroness Goldie]

My Lords, these amendments make a number of largely technical changes to this clause, which deals with the student complaints scheme in higher education. It may help if I begin by explaining that none of these changes impacts on the policy intent. This is to ensure that the definition of a qualifying institution for the student complaints scheme is widened to ensure that all providers on the OfS register will be required to join the scheme. Amendments 455 and 456 go slightly further by confirming, as is current practice, that higher education providers delivering courses in a franchise arrangement will also be required to join the student complaints scheme.

This approach means that all higher education students should have the same right to have their unresolved complaints considered through this route, provided that their complaint meets the requirements for consideration under the scheme. The key change we are now introducing is to ensure that the requirement we are putting into legislation that deals with providers that are no longer regarded as qualifying institutions of the complaints handling scheme will apply in both England and Wales. That is important given that the complaints handling scheme has operated successfully across both nations for over 10 years. In practice, this means that providers that cease to be qualifying institutions are classed as transitional providers and still subject to the scheme for a further period of up to 12 months. This ensures an additional protection for students.

In addition, through Amendment 457, we are making a minor change to ensure that the operator of the student complaints scheme continues to have the discretion to agree with individual providers what courses should be covered by the scheme. This is existing practice, and the amendment simply ensures it applies correctly to all those providers who are part of the scheme. Without this discretion, it is likely that the complaints handling scheme could inadvertently stray into other parts of the education sector, such as schools or further education. Many of the providers now joining the complaints handling scheme offer more than higher education courses. This might include courses considered as part of the schools or further education sector, where separate complaints arrangements are already in place. Finally, the amendments make some minor technical changes, mainly to ensure that this clause is linked to all the appropriate clauses in the Bill. I beg to move.

Amendment 450 agreed.

Moved by

[Baroness Goldie]

451: Clause 83, page 53, line 14, leave out from “section 40” to end to line 15 and insert “or 43 of the 2017 Act”,”

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[Lord Judd]

My Lords, the suggestion of an independent review bears very serious consideration. A very difficult issue confronts us on the matter raised in this amendment. In the considerable amount of time that the House has spent in recent years on issues of security, one thing that has always concerned me deeply is the dividing point between essential action and what in fact begins to be counterproductive.

We have to approach the issue of how universities play their part in the security of the nation by considering the danger of fostering extremism and unacceptable views by heavy-handedness or the appearance, however far from reality it is, that universities are acting as agents of the security services. If that perception gains ground, it will certainly provide more potential recruits for extremism and unreasonableness in the student community. I do not dissent, with the evidence of anti-Semitism and hostility to Islamic people, from the view that urgent action by the state is necessary. Security is the responsibility of the state and universities must play their part within the law and vigorously ensure that they uphold it—of course, that is right—but when we start using words such as “prevent”, I think myself into the position of young students discussing issues and saying, “What the hell is going on? Is this university really a place where we can test ideas?”. We must have self-confidence in the middle of all this; we must not lose our self-confidence. The whole point of a university is that we encourage people to think and develop their minds. Therefore, it is a very good place to bring into the open the most appalling ideas that some people have, so that they can be dealt with in argument, and the rationality and decency of most people can prevail. They are places where what is advocated may be argued against effectively and where those arguments may be demonstrated. If there is any move towards preventing such opportunities to take head on in the mind the issues which threaten us, we will be in great danger of undermining our security still further.

I said in an earlier debate, and I mean it profoundly, that the battle for security in the world must be won in hearts and minds. It will not ultimately be won by controls; it will be won by winning the arguments. If the opportunity to win the argument is not there in universities or begins to be eroded, what the dickens are we doing in terms of undermining our own security?

[Baroness Goldie]

My Lords, the threat we face from terrorism is unprecedented and very real. In addition to the framework of the criminal law, we must have a strong and robust preventive element to our counter-terrorism efforts. We must collectively help in the fight against terrorism and try to protect those who may be vulnerable or susceptible to radicalisation towards acts of terrorism.

I want to make it clear that HE providers are not being singled out as the potential cause or root of radicalisation. Responsibilities under this duty have also been placed on schools, hospitals, prisons, local authorities and colleges, and other institutions which regularly deal with people who may be vulnerable to the risk of radicalisation. In higher education, the Prevent duty exists to ensure that providers understand radicalisation and how it could impact on the safety and security of their staff and students.

I thank the noble Baroness, Lady Deech, for her helpful, informed and powerful contribution, which was cogently authoritative. What the Prevent duty does not do is undermine free speech on campus. Higher education providers that are subject to the freedom of speech duty are required to have regard to it when carrying out their Prevent duty. This was explicitly written into legislation to underline its importance both as a central value of our HE system and of our society.

The Higher Education Funding Council for England, the body responsible for monitoring compliance with this duty in England, reports that the large majority of institutions have put in place clear, sensible policies and procedures that demonstrate they are balancing the need to protect their students and their obligations under Prevent, while ensuring that freedom of speech on campus is not undermined. We have seen higher education institutions become increasingly aware of the risks to vulnerable students and there have been some really good examples across the sector of how to proportionately mitigate these risks.

On the whole, the higher education sector is embedding the requirements of the Prevent duty within its existing policies and procedures. It gets ongoing advice and support both from HEFCE and from our own regional Prevent co-ordinators. There is a wide range of training available to staff in HE and there is an ongoing dialogue between the Government, the monitoring body and the sector to ensure that the implementation of this duty is done in a pragmatic way.

It is also important to note that this amendment has another consequence because it seeks to disapply the Prevent duty not only in relation to English higher education providers but in relation to Scottish and Welsh institutions. That would require the consent of the Scottish and Welsh Ministers.

We welcome discussion about how Prevent is implemented effectively and proportionately, but blanket opposition to the duty is unhelpful and, dare I say it, dangerous, given the scale of the terrorist risk before us—the threat level currently stands at severe. The Prevent duty is an important element of our fight against the ever-increasing threat of terrorism. We must have an efficient strategy for trying to prevent people being drawn into it. On this basis, I very much hope that the noble Lord will feel able to withdraw Amendment 466.

[Lord Stevenson of Balmacara]

I thank all speakers in this debate. It is a difficult area and we certainly went into several of its most difficult parts. Surely my noble friend Lord Judd is right that there is a tension in attempting to address the worries expressed by the Minister in her concluding remarks by preventing the debates and discussions that might win hearts and minds and protect us, and which need to be protected against the changes the Government are seeking to impose.

The analysis is relatively straightforward. There is no room for illegal acts in any institution. I am sure the noble Baroness, Lady Deech, will accept that in proposing this amendment we do not wish to change that very obvious and important guideline. But the tension between free speech, which should exist in universities, and actions taken to inoculate against unpleasant and difficult ideas taking root does not seem well expressed in the legislation. This is a probing amendment which attempts to take that forward. In that sense, I felt that the Minister struck an odd note by suggesting that even discussing these issues in this Chamber was dangerous. If I am mistaken, I will withdraw that remark.

[Baroness Goldie]

What I said was that we welcome discussion about how to implement Prevent effectively and proportionately, but that we consider blanket opposition to the duty unhelpful.

[Lord Stevenson of Balmacara]

Unhelpful is certainly not the same as dangerous but I think the word “dangerous” was used—we will check the record for it. I do not regard it as dangerous to discuss these issues because they raise very important matters about freedom of speech and the ability to discuss and debate issues across a range of topics, not necessarily all concerned with terrorism. Therefore, in that sense, I resist that—but obviously not to the point that I would resile from the fact that this is really a tricky area and it is very hard to approach it without raising emotional and other issues that get in the way of the debate.

Maybe a review is required—maybe that would be the way forward. Maybe the Joint Committee on Human Rights will be able to take its work further. It was helpful to know that this work is still being considered, and maybe that is a way forward. The main achievement of this amendment was to get us into this whole debate and ensure that we understood and recognised the opportunities but also the threats that there are in trying to debate that. Maybe we can return to a more detailed discussion of this when we get to the group of amendments which raises the two particular issues about freedom of speech and preventing unlawful speech that are at the heart of the debate. I beg leave to withdraw the amendment.

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[Lord Watson of Invergowrie]

My Lords, I will say a few words in support of the noble Lord, Lord Storey. I commend him on the amount of preparation he has done for this amendment. I am very surprised at the extent of what he has revealed. I think we all know that, to a greater or lesser extent, cheating goes on—it is important to use that word—and in some cases fraud, but the extent of it is such that action needs to be taken. I am disturbed by the QAA more or less dismissing it, as the noble Lord, Lord Storey, said. And yet, as he pointed out, 17,000 students had been caught, and if that number were caught how many were getting away with it?

It is an issue that has to be addressed. Although there are means of catching cheats these days—software can be, and is, employed by universities that can spot and pick up patterns of writing—there are other ways that cannot be tracked easily. It would be helpful to have a recognition that this is a problem and for something at least to be said, if not done, by the Minister to indicate that the matter will be taken forward in a way that it has not been, effectively, up until now.

[Baroness Goldie]

My Lords, this amendment raises an important issue that is central to the quality and reputation of higher education in the UK. Plagiarism in any form, including the use of custom essay-writing services, or essay mills, is not acceptable and the Government take this issue very seriously. That is why the Government asked the QAA to investigate the use of essay mills in the UK. Following the QAA’s publication on this issue in August 2016, the Minister, my honourable friend Jo Johnson, said:

“Plagiarism is not acceptable and, on this industrial scale, represents a clear threat to standards in our universities … we are looking closely at the recommendations in this report to see what further steps can be taken to tackle this scourge in our system”.


The Government thank the QAA for its work exploring this issue and continue to work closely with it to progress the options and recommendations put forward. As a first step to addressing the issue, the Government have already met with Universities UK and the NUS to discuss a co-ordinated response. Within the next few weeks, my honourable friend the Minister will be announcing a new initiative, working with the QAA, Universities UK, the NUS and HEFCE, to tackle this issue.

On the amendment specifically, although we share the general intent, we are keen to ensure that non-legislative methods have been as effective as they can be before resorting to creating new criminal offences. That is where the initiative mentioned comes in. If legislation does become necessary, we will need to take care to get it right. We have to be absolutely clear about what activity should be criminalised and what activity should remain legitimate. That requires evidence, discussion and consensus. We do not yet have that.

To that extent, it is crucial we get the wording of the offence right. In the amendment tabled, it is unclear who would be responsible for prosecuting and how they would demonstrate intention to give an “unfair advantage”. For example, it may be difficult to prove that a provider intended to give an unfair advantage, or that an advertiser knew that an unfair advantage would be bestowed, and there is a risk of capturing legitimate services such as study guides under the same umbrella definition. What is an “unfair advantage”? On one view, a student who is able to afford a tutor when others cannot obtains an unfair advantage. That is surely not what this amendment is trying to catch. But can we be sure that it does not, and where do we draw the line instead? These are not things that can, or should, be rushed when the result is a criminal record.

The effectiveness of a legislative offence operating as a deterrent will depend on our ability to execute successful prosecutions, and as such, we will need to be confident about these principles, as well as about who has the power to prosecute and how they will capture sufficient evidence. Rather than taking a premature legislative response to this issue, we believe it is best first to work with the sector to implement non-legislative approaches. We will of course monitor the effectiveness of this approach and we will certainly remain open to the future need for legislation if it proves necessary.

I hope I have reassured the noble Lord that the Government are committed to addressing this issue. Although the Government remain open to future options, as we do not believe that legislative action is the best response at this time, I ask that the amendment be withdrawn.

[Baroness Deech]

Has the noble Baroness brought her mind to bear on whether the students who solicited the cheating essay would also be caught up in the criminal offence? This is not really my area of law, but I suspect that conspiracy to commit a criminal offence might catch those students.

As has been said—and as I know from my experience as the independent adjudicator for higher education—many foreign students, some for quite innocent reasons, get caught up in this. Part of the cure is to have better orientation for foreign students to explain to them what is expected. This applies in particular to Chinese students. I am painting this with a broad brush, but apparently they are told from the age of five onwards that one should collaborate rather than compete, and that one should listen to every word the venerable professor says and repeat it in exams, which is not the way we do things. They are therefore innocent in their own minds, so we need to clarify this amendment and ensure that foreign students know what is expected of them.

[Baroness Goldie]

I thank the noble Baroness for her helpful intervention. I cannot answer on behalf of the noble Lord, Lord Storey, but no doubt he will make some concluding remarks.

[Lord Storey]

The Minister is absolutely right: this should not be rushed and we should get it spot on. We have a responsibility to universities, students and academics. I am glad the noble Lord, Lord Watson, mentioned software. There is a software programme called Turnitin, which will identify parts that have been plagiarised.

Professor Deech—I am sorry, I mean the noble Baroness, Lady Deech; I am not sure whether I am promoting or demoting her—raised the issue of students who are caught. Interestingly, there are solicitors who advertise their services on campus to represent and help those students who are caught. When students are caught, as noble Lords can imagine, there are varied practices right across the sector about how they are treated. Some students who are caught are given a slap on the wrist; others are actually sent down. Some have to repeat a year and some lose marks, so there is no consistent policy in higher education as a whole.

I am delighted that the Minister told us of the new initiative that will be announced. The NUS, as well as supporting students—your heart goes out to students who are caught in such a situation, perhaps for all sorts of reasons—will be there on campus to make sure students realise how serious this is. If they are caught, the NUS, wearing another hat, is there to represent them, I suppose. I am delighted that this initiative is taking place and we will see where it leads.

Finally, I mentioned Professor Newton, who emailed me. It was interesting, and this is why I hope to come back to this. He wrote that he just wanted to highlight the word “intent”:

“The amendment as currently proposed would make it quite easy … for essay-writing companies to hide behind a defence that they provide ‘custom study aids’ and that it is the students’ responsibility to use them appropriately. If the amendment could be tweaked to take ‘intent’ out of the equation, then the law would become much more powerful”.


I hope that between now and Report, we could perhaps meet to talk this over and see where the initiative goes. We really do need to take action on this matter. I beg leave to withdraw the amendment.