Higher Education (Basic Amount) (England) Regulations 2010

Lord Henley Excerpts

Tuesday 14th December 2010 Lords Chamber

Moved By

[Lord Henley]

That the draft regulations laid before the House on 29 November be approved.

Relevant documents: 10th Report from the Joint Committee on Statutory Instruments and 14th Report from the Merits Committee.

[The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Henley)]

My Lords, I will speak also to the second Motion in my name, on the higher amount, to the amendments in the name of the noble Lord, Lord Triesman, and to the Motion in the name of the noble Lord, Lord Bilimoria. I will explain why the House should not support either the amendments of the noble Lord, Lord Triesman, or the Motion of the noble Lord, Lord Bilimoria.

The subject that we are considering has aroused strong feelings. I will talk about the package of measures that the coalition Government are proposing, but will start by describing factually the Motions before the House. The Higher Education Act 2004 allowed publicly funded higher education institutions to charge for their tuition costs, subject to conditions. It created the concept of a basic amount and a higher amount for these charges; there are effectively two caps, a basic cap and a higher cap. Any higher education institution can charge below the basic amount, and the Act sets no conditions for this. An institution that wishes to charge above the basic amount can do so only if it has first agreed an access plan with the Director of Fair Access. No publicly funded institution can charge above the higher amount.

More than six years after the Act was passed, the Motions before the House today propose increases to the basic amount and to the higher amount. For the basic amount, the proposed figure is £6,000; for the higher amount, it is £9,000. The basic amount of £6,000 is not a minimum figure; it is a cap, beyond which any institution looking to charge more requires an access agreement. There is nothing to stop any provider of higher education charging less. I should also explain how this translates into the Motions on the Order Paper today.

Changes to the basic cap on tuition charges, set at £1,200 by the 2004 Act, can be made by statutory instrument subject to an affirmative resolution. A Motion to approve draft regulations raising the basic amount is therefore the first Motion standing in my name on the Order Paper today.

The amendment to my first Motion, tabled late yesterday by the noble Lord, Lord Triesman, would, if carried, prevent the regulations being approved and is consequently fatal. I should remind the House what fatal means. There is absolutely no mechanism for the Commons to address or put right a defeat in these circumstances, and accepting one or both of the noble Lord’s amendments would therefore, in practice, be a veto. There is no ping-pong in this case.

During the passage of the Higher Education Act 2004, concern was expressed in this House and in another place about the arrangements for increasing the higher level for tuition charges. There was concern that Ministers should not be able to make new regulations, setting new higher levels, without a debate on the Floor of both Houses. The solution agreed is set out in Section 26 of that Act. Regulations that would increase the higher level can be made only if both Houses have previously passed a resolution specifying what the new higher level should be and the date from which it applies. Only once that resolution has been passed can regulations be made to increase the higher level to that amount.

A resolution under Section 24 of the Higher Education Act 2004 raising the higher amount is therefore the second Motion standing in my name on the Order Paper today. I should stress that the amendment to my second Motion proposed by the noble Lord, Lord Triesman, is also fatal. If the amendment were carried, my resolution would no longer meet the requirements of the Higher Education Act 2004. My two Motions, which have been approved in similar terms by another place, are part of a package and they are linked.

The Motion in the name of the noble Lord, Lord Bilimoria, is a free-standing resolution. Although it will be debated alongside my two Motions and the amendments thereto, it will be decided separately and independently at the end of our debate if the noble Lord decides to move it. The Motion calls on the Government not to implement increases in the higher level or basic level in 2012. The Government believe that that course of action would damage our higher education system, and I will consequently be urging the House not to support the noble Lord’s Motion.

The backdrop to our proposals is the huge fiscal deficit that we inherited. We can no longer ask the taxpayer to continue the current level of higher education funding. In tackling that deficit, we want to maintain a high-quality university sector that is more responsive to the needs of students and is underpinned by a progressive system of graduate contributions.

We have carefully studied the independent review of higher education funding and student finance undertaken by the noble Lord, Lord Browne of Madingley, who reported in October after months of consultation. I pay tribute to the noble Lord for that report, in which he made a powerful case for reform. We have also listened to representations from universities, students and parents. I cannot accept the suggestion that appears in the amendments tabled by the noble Lord, Lord Triesman, that there has not been enough discussion of these issues.

In essence, we are changing the way that funding flows to our universities and colleges. From 2012-13, we will start to reduce the amount of funding that we provide to the Higher Education Funding Council for England to support university courses. This is in line with our announcements in the October spending review. The council will still get funding for the highest-cost subjects and for those that are strategically important and vulnerable.

We are correspondingly increasing the public money that we will make available as loans for students who want to attend higher education. In all, we do not expect the overall income of the higher education sector to reduce. We are also maintaining, in cash terms, our spending on the science budget with resource spending of £4.6 billion a year by 2014-15.

The regulations and resolution that we are proposing today enable those universities and colleges that can attract students to get the funding that they need to offer high-quality teaching. Universities will decide what charges they make for which of their courses. They will need to estimate the value that students place on what they are offering and adjust their charges accordingly. We believe that having to consider carefully what potential students want and need will benefit universities as well as students. Crucially, no full-time undergraduate student studying for their first degree will need to pay any of their tuition costs up front. The tuition loans from the public purse will not be means-tested and will cover the full costs of the courses. We will, for the first time, be giving part-time undergraduate students a similar entitlement to tuition loans as full-time students, on a pro rata basis. Following representations from universities with large numbers of part-time students, we are extending the entitlement to tuition loans to students studying for at least one-quarter of their time, rather than one-third of their time as was originally proposed.

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[Lord Campbell-Savours]

Can the Minister confirm that there are two Motions today; one deals with the regulations, and the other deals with a Motion? Can he confirm that the second one cannot be treated as secondary legislation?

[Lord Henley]

There are two Motions. The second one is not secondary legislation at all, but it is a Motion that we have to pass under the 2004 Act, which the noble Lord’s Government passed. As I explained, they passed the concept of the Motion, because there was a concern both in this House and in another place, where I think that the noble Lord was at the time, about proposals for increasing fees. That is the proposal before us and that is why we are discussing it.

As I was making clear before I was interrupted by the noble Lord, the regulations and the resolution form only part of our higher education proposals, but they are an urgent part. We bring them forward today because students, their families, and universities all need to know what the arrangements will be from the 2012-13 academic year. The fatal amendments of the noble Lord, Lord Triesman, would put a halt to that, while the Motion of the noble Lord, Lord Bilimoria, asks us to delay, but these decisions are needed now. We also plan to issue a White Paper early in 2011, to deal with the equally important but less urgent higher education questions. As I said, today’s proposals are part of a progressive package that will put higher education on a stronger footing for the future, and I commend them to the House. I beg to move.

Amendment to the Motion

Moved by

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[Lord Henley]

Perhaps it would help if I explained that it is up to my noble friend Lord Ashdown to decide whether he gives way. My noble friend has already taken two or three interventions; he is under no obligation to take any more if he does not wish to.

[Lord Ashdown of Norton-sub-Hamdon]

I apologise to the noble Lord. I have already been speaking for 11 minutes and if I were to take his intervention, I would be testing the patience of the House, so I will finish. The noble Lord, Lord Triesman, painted a Dickensian picture of the poor family who cannot afford to pay the fees. However, it will not be poor families who pay, but graduates when they are earning more than £21,000. The question is; are these proposals fairer or less fair than the present system? The answer is that instead of starting repayments on a salary of £15,000, students will start them on a salary of £21,000. The level of their repayment will be about half what they are paying at present. The rich will pay more than the poor; that is not the case under the present system. Part-time students will not pay up front; that is not the case at present. The fact that students will be repaying the costs for longer will mean that they will be able to repay when their salaries are higher. Many students have told me that one consequence of the present system is that they are repaying in their mid-30s, precisely when it is most difficult. They will now be repaying in their mid-40s, when it will be far easier.

When I vote tonight in favour of the proposals, I will vote not out of defensiveness but because I believe that they are progressive, that they will be followed elsewhere in the world, that they are right for higher education and, above all, that they are fairer for students, especially students from poorer families.

[Lord Morris of Handsworth]

My Lords, I, too—

[Lord Henley]

If the House would like me to intervene, I will make a few remarks. Others wanted to speak, but I am in the hands of the House. I will start by saying a word or two—I will give way to the noble Lord.

[Lord Pearson of Rannoch]

My Lords, I will speak briefly in support of these regulations. I do so after spending 10 years validating the polytechnic sector on the Council for National Academic Awards. My experience is unusual; I am a non-academic who spent 10 years close to higher education. That experience leads me to suggest that if the Government's plans result in the closure of a large number of courses in the humanities departments of the former polytechnics—in particular teacher training courses—that would be a considerable achievement. It would save a lot of money that could be channelled to serious courses, and it would stop the short-changing of many thousands of students who attend humanities courses and find themselves ill equipped for the world of work, or indeed for making any useful contribution to wider society. The students themselves will be the best judges of the courses and will not enrol on those that they consider to be a waste of their time—indeed, perhaps even a waste of their lives.

I also congratulate the Secretary of State, Michael Gove, on his attempts substantially to raise the quality of teacher training. I believe that these regulations will do much to help him to achieve that.

Beyond that, and finally, I believe that these regulations will start to create something which has been sadly missing in our system of higher education—a system of quality control. I know that there is a system of quality assurance but that is not at all the same thing. The quality control brought in by these regulations will be manned by the students with the teeth to make it effective, and I cannot think of anyone better to do it. Therefore, I support the regulations.

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[Lord Henley]

My Lords, it is wonderful to be so welcome. I noticed the declaration of interests that the noble Lord, Lord Triesman, made at the beginning of his somewhat lengthy speech, although it was none the worse for that. My noble friend Lady Shephard described him as having a silky tongue. I had better declare another interest in that I was one of those higher education Ministers who saw him, and I declare the interest that I greatly enjoyed the lunch that he gave me some 13 or so years ago. I am not sure that I ever declared it at the time but it was a very useful meeting, as he explained to me just how many members of his union were in both Houses. I think he claimed that he had more than any other trade union leader in the history of trade union leaders having members in this House.

I listened with interest to the somewhat lengthy speech of the noble Lord, Lord Triesman, but I heard no coherent argument in it whatever. It was a mere rant, with no solution put forward by the party that got us into the mess that my noble friend Lady Shephard described. He claims that there is no evidence and that there was no consultation, but does he not think that the report produced by the noble Lord, Lord Browne, and commissioned by the Government of whom he has been a member, provided just that? In that report there is evidence, and in the production of that report there was a great deal of consultation.

A great number of points have been made during this debate and I want to deal with some of them in order to knock the myths that are growing up. The first one—addressed, first, by the right reverend Prelate the Bishop of Lincoln but brought back to us again and again—is the idea that the poorest will be deterred. The right reverend Prelate referred to the removal of the education maintenance allowance for 17 and 18 year-olds. I understand that the removal of the EMA was examined in a report by the party opposite when it was in government. The report showed that some 90 per cent of the money was being wasted, and it was not encouraging the children involved to stay on at school, as they would have stayed on anyway. I think that my right honourable friend did exactly the right thing in suggesting that that money could be moved and made better use of.

In terms of the poorest being deterred, many of us made that argument when student fees were introduced. It started, as the noble Baroness, Lady Blackstone, said, in 1998 and was then enhanced by the 2004 Act. On both occasions we saw an increase in those from less well-off homes going into higher education, and I do not see any reason why that should not happen again. We will certainly continue to examine what happens after these changes come into force.

The next point—put forward by the noble Baroness, Lady Blackstone, and the noble Lord, Lord Krebs—is that our decision to increase the upper cap to £9,000 is purely a political choice and that we have made it for no other reason than we want to save money. I must make it clear that in their Pre-Budget Report of 2009 the previous Government identified some £600 million of cuts to higher education and science to be made by 2012-13. The department responsible for universities, BIS, was not protected in Labour’s public expenditure plans, so it is hard to see what protection a Labour Government would have produced over the spending review period if they had not been able to cut departments’ budgets by some 25 per cent, which is exactly what we have done.

That deficit exists—we inherited it—and the Government are responsible for the interests of all taxpayers in meeting it. At a time of real financial hardship, we believe it is right to make cuts across public spending, but we do not believe that it is right to ask those on low incomes to pay additional taxes to prop up an unaffordable university funding system from which they do not benefit directly. Obviously there is a benefit to all of society—I accept that—but there is a greater benefit for the individuals going to university and I do not think that we can get away from that.

The second point that I want to address is the idea put forward—again, by the noble Baroness, Lady Blackstone—that the new system will not save any money. She quoted the Institute for Fiscal Studies and the Higher Education Policy Institute, which have both questioned whether the policy will save money in the end. I say to the noble Baroness that our proposals contribute directly to paying down the deficit because they replace grants with loans, of which about 70 per cent are expected to be repaid in due course by those on higher earnings. We are reducing the direct funding of universities via the teaching grant—

[Baroness Blackstone]

My Lords—

[Lord Henley]

I shall give way when I have finished this point and then the noble Baroness can spring to her feet. However, it is up to me to decide whether I give way. We are reducing the teaching grant and increasing the loans, and therefore universities’ funding will not be affected.

[Baroness Blackstone]

My Lords, is the Minister aware that HEPI has carried out substantial analytical work which suggests that the Government have been over-optimistic in their assumptions—I do not want to go into all the detail now—about how much of the loans will be repaid? It has come up with a figure much closer to 50 per cent than 70 per cent.

[Lord Henley]

HEPI has done its research based on its assumptions; we have done ours based on our assumptions, and I am confident that our assumptions—

[Noble Lords]

Oh!

[Lord Henley]

This is not the time or place for the noble Baroness and me to go into these matters. The noble Baroness and I have been arguing points for 14, 15 or even 20 years and we have never necessarily agreed, so I do not suppose that we would agree if we argued for a bit longer about this. The simple fact is that we are confident about the robustness of our assumptions, and HEPI obviously takes a different view.

Those were the two principal myths that I wanted to stress. I also make it clear that we have considered all these issues carefully. However, as I said in my opening remarks, we recognise that very strong feelings have been aroused. I underline and re-emphasise that our proposals mean that when graduates come to pay—and they will not pay until they earn more than £21,000, and in due course that £21,000 will be uprated in line with earnings—they will pay less per month than they do at the moment. I also stress that that will be needs-blank and that in many cases they will not be paying anything at all, particularly if they have taken a career break or are not earning up to that limit.

These regulations will also allow us to provide a funding stream which enables our universities to attract a flow of income to sustain their world-class position. I am very grateful that noble Lords such as the noble Lord, Lord Bilimoria, stressed the global status of our universities. There is unprecedented global demand for higher education and we cannot let our HE sector drop behind our international competitors. I think that the number of people coming from overseas indicates that they are maintaining their position. However, in this current fiscal climate, that requires significant changes to higher education funding and student finance.

The next thing that I want to stress, which is contrary to what the noble Lord, Lord Triesman, said, is that we greatly value the autonomy of our higher education sectors. They are not emanations of the state, as the noble Lord put it. Each university and college is autonomous and each will be free to decide what contribution it sets for its courses. As we know, a number of vice-chancellors in England have indicated publicly that the Government’s proposals for university funding are reasonable and retain fundamentally important progressive elements. Again, I am grateful for all those who have stressed, like the noble Lord, Lord Ashdown, the progressive nature of our proposals.

[Lord Alton of Liverpool]

I thank the Minister for giving way and I declare an interest in that I hold a chair with Liverpool John Moores University and am a visiting fellow at St Andrews. I want to test the Minister on whether the proposals are progressive, as has been asserted all the way through this debate, even though the Institute for Fiscal Studies has said that they are regressive. The IFS says that those who will be hit the hardest are not those coming from the free-school-meals category but those in the 30 per cent category of the lowest income earners in this country. Does the Minister agree with that assessment?

[Lord Henley]

I do not agree with that assessment because no one will be paying anything until they earn £21,000 or whatever the figure will be after it has been increased. That figure of £21,000 is roughly the average wage. Thereafter, we go on up to about £42,000 before people pay the maximum, which is RPI plus 3 per cent. I do not think that that is the credit card levels of interest that the noble Lord and others seem to imply. That is not a heavy repayment to ask of someone on £30,000, £40,000 or even £50,000 or £60,000. If we take medical students as an example, a GP now earns in excess of £100,000. When one thinks of their investment, that is not a bad return.

I now want to deal with timing, as it has been alleged that we are rushing this through too fast. I want to stress again that we have a responsibility to give students, their families and the universities certainty about what arrangements will be in place for the 2012-13 academic year. One has to remember that, although the White Paper will not come out until early in the new year, already by then students will be beginning to visit the universities that they want to apply to for 2012. They will be starting to apply in the summer of 2011 for some courses, so everyone, including the institutions, need to know where they stand and when they can plan ahead.

Finally, I come back to the nature of the amendments. The noble Lord, Lord Triesman, has sought to reassure the House that his amendments are merely an invitation to the Government and another place to think again. I make it clear in no uncertain terms that this is not an occasion when we can think again. These two amendments are fatal and, if carried, would negate and override the vote in another place last week.

[Lord Wills]

Before the Minister concludes his remarks, I wonder whether he will address the question of humanities in the curriculum of our universities. What guarantee can he give that humanities will continue to have an appropriate place in curriculums?

[Lord Henley]

They will have an appropriate place in the curriculum. Universities will be able to charge fees to students and will receive them up front without the students having to repay anything. The fees will then go to the universities. That is what this is all about. In the end, the good universities will flourish and good courses will also flourish.

[Lord May of Oxford]

Has the noble Lord given thought to the fact that, although a vote against the regulations would cause chaos in its immediate wake, as he just mentioned, it would prompt immediate action, whereas the alternative of embracing these regulations will set in train something that will persist for years and arguably inflict huge damage? How does he weigh the two?

[Lord Henley]

Voting against the regulations would inflict huge damage for the reasons that I have explained, given the nature of the loans and the fact that they will not be repaid until the individual is earning a reasonable amount. If the individual never earns anything or takes a career break, he will not have to repay. I do not believe that the regulations will inflict that damage. I am making it clear that for the House to reject the Motion would be fatal.

[Baroness O’Neill of Bengarve]

The Minister is reminding us that the difficulties on the consumer side are not as great as some noble Lords have suggested. I accept that this is an ingenious splice of a graduate tax and a graduate loan system that is highly protective of the poorest. I think that many noble Lords are asking the Minister to address the question of damage to the supply side produced by moving too rapidly. I hope that, before the Minister finishes his speech, he could say a bit about the Government’s assumptions on the range of closures, mergers, bankruptcies and disproportionate patterns of damage to certain courses but not others. That will give the House a better basis for understanding what the Government anticipate than continual harping on an issue that I accept is of great concern to prospective students and their families but has not been sufficiently well explained. The students are well protected, but the institutions may not be.

[Lord Henley]

I believe that the institutions themselves can benefit from this, as I made clear in my opening remarks. The institutions are autonomous; they are not, as the noble Lord, Lord Triesman, put it, emanations of the state. Those autonomous institutions can make decisions on what courses they offer in seeking to attract appropriate students and on matters such as the length of courses and in what fields they are offered. There will be changes, but it is not for the Government to predict what will happen. We believe that we are making provision for students and those from less well-off families and we are providing opportunities for the institutions themselves. We also believe that it is necessary to put the measures in place so that everyone knows what is happening for the academic year starting in autumn 2012. That is why I stress again, as I have done two or three times, that the amendments in the name of the noble Lord, Lord Triesman, are fatal.

[Baroness Symons of Vernham Dean]

Does the Minister recall that, on 17 January 2007, the elected House gave this House the right to vote on statutory instruments when they might prove to be fatal, when it debated the all-party report on the conventions between the two Houses? The other place gave us that right without dissent and this House did the same the day before.

[Lord Henley]

We have always accepted that this House has a right, if it feels appropriate, to vote down orders. However, this House should consider that very carefully before doing so. That is why I am warning the House that it ought to remember that these two amendments are fatal. For that reason, I recommend that the House rejects them.

[Lord Triesman]

I shall be brief. If I made points at length before, I apologise but I thought them important. I certainly do not apologise for the links that I have had with former Ministers responsible for education. That was always part of the consultative process. In those days I always thought that they were welcome, as I welcomed the opportunity as well. As a consequence they will make no difference at all to my Christmas card list. In those conversations we always agreed that one of the most cherished things about universities was their autonomy. It is certainly true that because some of the money that goes to universities flows through the Exchequer it was always the case that they were emanations in that sense, unless you can move it off the books, which is the cunning mechanism that is being described this time.

Of course they are fully and proudly autonomous organisations. Has there been change and reassessment on this side of the House? I hope so. There were always reasons for thinking about whether the proposals that we made were the right ones, and if you lose an election—and we did—it is essential that you think again about what you proposed, to consider whether it was most appropriate. I have no doubt that that has been the case for every party that has lost elections, including the previous one—including the Liberal Democrats, who lost that one as well.

I want to make only one or two specific comments. I thank everyone who has taken part in the debate, because it has been illuminating for me. I promise you, I could not do justice to what has been said; I would speak for too long and that would probably meet with your disapproval.

First, I say to the noble Baroness, Lady Sharp, that I am not chiding anyone about using the right. It was plain that the right to vote or speak against such a proposal was put into primary legislation for good reason. That is not chiding: I welcome it, I applaud it, and those who pushed it were right to push it.

Secondly, I say to the noble Lord, Lord Ashdown, that I read documents and understand that students will not be repaying while they are at university. I hope that everyone in the House will do each other the credit of believing that they have read and understood the fundamental documents, without patronising one another.

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Moved by

[Lord Henley]

That, for the purpose of section 24 of the Higher Education Act 2004, the higher amount should be increased to £9,000, and to £4,500 in the cases described in Regulation 5 of the draft regulations in Command Paper 7986, and that the increase should take effect from 1 September 2012.

[Lord Henley]

My Lords, I have spoken to this Motion, and I think that I would weary the House if I spoke again. I beg to move.

Amendment to the Motion

Moved by