Higher Education and Research Bill

Debate between Baroness Goldie and Baroness Royall of Blaisdon

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

[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.

Brexit: Higher Education

Debate between Baroness Goldie and Baroness Royall of Blaisdon

Thursday 15th December 2016 Lords Chamber

[Baroness Royall of Blaisdon]

To ask Her Majesty’s Government what steps they intend to take to ensure that the higher education sector is represented in all of the Brexit negotiations.

[Baroness Goldie (Con)]

My Lords, the Government have been clear that they want to create an environment in which the UK can continue to be a world leader in research, science and the tertiary education sector more broadly. The Department for Exiting the EU has already engaged with a number of higher education institutions and groups to ensure that their interests are represented in the Brexit negotiations. This engagement will continue over the next few months through a series of round tables, bilaterals and visits across the UK.

[Baroness Royall of Blaisdon (Lab)]

My Lords, I declare my interest as Pro-Chancellor of the University of Bath. Will the Government ensure that one of their negotiating priorities is future access by our universities to EU programmes such as Horizon 2020, which is vital to our research excellence? However, in view of the significant decline in EU undergraduate applications for 2017 entry, my immediate concern is that the Government should make a clear statement as soon as possible on the conditions relating to EU nationals who wish to apply for courses beginning in 2018, including with regard to tuition fees and access to finance. Clearly that is vital to enable—

[Baroness Royall of Blaisdon]

I am sorry; it might be too long but I am going to ask my question anyway. It is vital to ensure effective planning for the next cycle for both students and universities. When will the Government make such a statement? And yes, my Lords, I was reading.

[Baroness Goldie]

I am accustomed to getting questions from your Lordships one at a time but the stereophonic effect is a little disconcerting. The noble Baroness raises a very important issue in relation to Horizon 2020. I very much hope that the recent announcement guaranteeing Horizon 2020 funding and the Prime Minister’s announcement that we will be investing an extra £2 billion a year in research and development underline the Government’s commitment to keeping the UK at the cutting edge of science and technology.

I think that, in among the commentary, I detected a question about university access and funding for EU students. The noble Baroness will be aware that to help provide certainty and respond to the sector’s concerns, we confirmed that existing EU students and those starting courses in 2016-17 and 2017-18 will continue to be eligible for student loans and home fee status for the duration of their courses. Applications for 2018-19 do not open until September 2017, and we will ensure that students applying have information in advance of that date.