Higher Education: Financial Pressures

Baroness Twycross Excerpts

Thursday 30th March 2023 Lords Chamber

[Baroness Twycross (Lab)]

My Lords, like others, I thank my noble friend Lord Knight for calling this important debate today. I am pleased to be able to take part in what has been an informed and informative debate. I apologise to the House for being slightly late at the start of the debate; a rookie mistake but one which, in the context of a debate about learning, I promise I will learn from.

British higher education has historically rightly been held in high esteem. The UK has welcomed, and benefitted from, the large number of overseas students wanting to study here, and from overseas academics contributing to research and teaching. British universities are known and respected round the world. We have some fantastic higher education colleges, delivering top-rate courses. Many of us in this House, including me, have benefitted in our lives and careers from superb education from these world-class institutions. However, as this debate has shown, we cannot take this for granted.

The noble Lord, Lord Wallace, and others highlighted the sometimes insecure and comparatively low-paid nature of academic life, and the risks this creates. As so many of the contributions have noted, the financial sustainability of our higher education is one we should not take for granted. It is clear, and this point was raised by so many noble Lords today, that it cannot be right that the higher education system has a current financial model that finds so many institutions in deficit.

I repeat the concerns raised by my noble friend Lady Wilcox, which surely must concern this whole House, that in just four years under this Government the number of institutions with an in-year deficit has risen more than sixfold, from 5% in 2015-16 to 32% in 2019-20. That is about a third of all higher education institutions. In any other sector, this would be regarded as a crisis.

Do the Government agree with the Office for Students that there is no major risk of one or more higher education institutions failing due to financial issues? If so, why are they not concerned? Is it complacency or is it just that the Government are hoping the problem goes away, or do they have a plan for resolving the issue? I would be interested to know whether any higher education institutions have raised specific concerns with the Government, or the Office for Students, about their financial sustainability? What assurances have the Government sought in relation to the sustainability of the sector?

I was particularly struck by the contributions of my noble friends Lord Knight, Lord Hanworth, Lord Davies, and others, on the fact that universities make a loss on UK students. My noble friend Lady Warwick gave a welcome focus on the student experience, and I particularly note the point made by my noble friend Lady Donaghy that there is a significant and almost greater risk than the failure of an institution of a decline in the quality of courses provided to students. With respect to the noble Earl, Lord Dundee, I fear that this might be increased were online courses, as he proposed, not confined to where they are appropriate but extended more widely simply to save cost.

Our British higher education institutions have a proud history of innovation. Over the past few years, at the exact same point at which the financial stress on universities has been starting to show, we have seen British research contribute to the fight against Covid, not least in relation to the development of some of the first vaccines. Can the Minister tell the House how the Government intend to make sure that the UK can continue to be at the forefront of innovation through the higher education system? Will they look, as my noble friend Lord Davies and others suggested, to rejoin Horizon, and will they take up the suggestion of my noble friend Lady Donaghy to provide financial support to universities for courses in much-needed expertise, such as medicine, nursing and teaching, to ensure we can get home-grown UK graduates into key roles?

As has been noted in this debate and by Universities UK, the economic contribution of the HE sector in England is considerable, contributing £52 billion to GDP and supporting more than 815,000 jobs. As someone who grew up in a university city, I know that a university town or city depends on these jobs—quite simply, the service industry or tech industries that grow up around a university would be unlikely to thrive without the university being there. As the noble Lord, Lord Austin, said, a university or higher education institution can also renew areas where traditional industries have declined or vanished by introducing valuable new jobs and skills.

My noble friend Lady Wilcox described the potential consequences for a community of their local college going under as simply too catastrophic for the regulator not to do everything in its power to set the conditions for success. In relation to the sector’s dependence on overseas students, the Government simply cannot have it both ways. We gain in so many ways from having the rich exchange of ideas and cultures that overseas students and academics provide—a rich exchange that, as my noble friend Lord Leong made clear in his passionate speech focusing on Erasmus and Turing, ideally works both ways, with UK students and academics having the opportunity to go overseas, as well as people coming here.

Many noble Lords, including the noble Lord, Lord Parekh, the noble Baroness, Lady Garden, and my noble friend Lord Davies noted concerns about Turing. Overseas students studying in UK higher education here, as this debate has demonstrated, provide financial benefits to our universities and colleges—arguably to a much greater extent than is appropriate. As the noble Viscount, Lord Chandos, pointed out, this carries significant risks.

What is unarguable, however, is that the Government cannot assume in one department that overseas students will shore up the finances of our higher education sector, when in another they try to make it considerably harder or less attractive—even through rhetoric—for overseas students or academics to come to the UK. As my noble friends Lord Davies and Lord Hanworth said, this income from overseas students is also at risk from wider geopolitical issues and concerns. Can the Minister reassure us that government departments are talking to each other and agreeing a strategy in this regard?

The final point I would like to make—although my notes go on for a bit, so it is not necessarily my final point—is in relation to the role of higher education in social mobility, or “levelling up”, as a number of noble Lords have referred to it. Last year, as highlighted in the Financial Times this week, the number of people applying to university through UCAS was 767,000 and UCAS is predicting that by 2030 this will rise to 1 million, cue to the mini-boom in the birth rate that will lead to an increased demand by the end of the decade. It is understandable and right that students and their families aspire for children to achieve their potential, to do well at school and to go on to university; we value education not just for its own sake but for the opportunities it provides.

Does the Minister agree with the Minister for Higher Education that the new places to ensure that the increased number of applicants can access higher education may not be for undergraduate degrees but could well be within further education or apprenticeships? I could not have agreed more with the noble Lord, Lord Austin, on the points he raised about the rhetoric on limiting the number of children going on to university, and the fact that the children who do not go on to university, in the minds of the people who are saying this, are not their own.

What are the Government intending to do to make sure that the higher-status courses—those that often lead to higher-paid opportunities—are open to all, irrespective of who prospective students are and where they come from? I would be concerned if these students did not have access to a supply of high-quality opportunities. As the chief executive of UCAS has made clear, the interests of disadvantaged students must not lose out or be forgotten during the period of increasing competition. She rightly pointed out:

“This is an economic challenge as much as an educational one”—


and it is a challenge for opportunities.

I would ask the Minister to do whatever she can to respond to this point, and to other points raised in this debate. The future of our higher education institutions, and the towns and cities they are part of and support through their presence, is at stake. Critically, the life chances of their current and prospective students depend on this Government taking the issues raised today seriously and not simply hoping that the problem of higher education financial sustainability will go away. The price is simply too high.