Higher Education Funding

Duke of Wellington Excerpts

Thursday 12th September 2024 Lords Chamber

[The Duke of Wellington (CB)]

My Lords, I declare an interest as a former chairman of King’s College London, where my neighbour on these Benches is a distinguished professor.

It is surely clear to everyone—it has been stated many times today—that the situation with university funding is now unsustainable. The coalition Government bravely increased student fees to £9,000 in 2012, against massive opposition at the time, but there was probably no alternative at that moment. They then lost their courage and, in the following 12 years, the only increase was a further £250 in 2017. Whenever a Government, in effect, freeze fees of this nature, there eventually comes a moment of reckoning. I feel very sorry for students who now leave university with a debt of £40,000 or more. Fortunately, the latest iteration of the student loans scheme now charges an interest rate equivalent to the retail prices index, but previously it was very much higher, which in my opinion was shameful. But although the interest rate is lower, so is the threshold above which the loans are repaid, currently £25,000 a year. This seems far too low, and I suggest to Ministers that they ought to raise this threshold and, as others have said, from now on they must consider small annual increases to the student fee.

However, the real problem is that universities are running at a deficit. In 2022-23—the latest figures I have seen—a government agency has estimated the loss by the universities from teaching at £1.5 billion per annum and the loss from doing research at £4.5 billion. In fact, very few, if any, universities make a margin on their research, yet most universities undertake research. Although it would be very much against the culture of many universities, we must at least consider whether the country can afford for so many universities to do research.

The other major difficulty for universities is the reduction in overseas students, as many have said. This year, there has been a considerable decrease in foreign postgraduate student applications. This is a very important source of revenue for most universities and the decrease is a direct result of the previous Government’s decision to restrict visas for families. But as the average age of postgraduates is 25, they are likely to have families, and it does not seem reasonable to place such a harsh limit on family members accompanying postgraduate students.

I could never understand the previous Government’s hostility towards overseas students, although of course they always claimed otherwise. The fact is, it is very much in this country’s interest for overseas students to come to our universities. I therefore suggest to the Minister—apparently she has tried and not yet succeeded—that she must try again to persuade the Home Office to issue more visas, not fewer, to foreign students. The alternative is to put more taxpayers’ money into the university system, and I cannot believe she is able or willing to do that.

So, although it is a somewhat overused word, I agree with the original wording of this debate from the noble Lord, Lord Krebs, that there is a crisis in the funding of our universities, and, regrettably, Ministers will have to do something about it.