University Tuition Fees

Lord Johnson of Marylebone Excerpts

Monday 27th November 2017 Westminster Hall

[The Minister for Universities, Science, Research and Innovation (Joseph Johnson)]

I am grateful to the petitioners for giving us the chance to have this debate as well as to the hon. Member for Hartlepool (Mike Hill) for introducing it.

Enabling people from all backgrounds to take advantage of the opportunities provided by higher education is obviously an important goal for the Government. Since reforming the student finance system in 2012, the Government have been able to lift the enforced cap on student numbers that had been in place for many years and remove the associated cap on social mobility that it represented. We have enabled record numbers of 18-year-olds, including those from disadvantaged backgrounds, to start in higher education. We have also increased the total resources available to universities by about 25% per student per degree, according to the IFS. As a result of all of that, increased numbers of students stand to benefit from increased lifetime earnings of at least £100,000 more than non-graduates after tax.

[Mr Christopher Chope in the Chair]

However, it is only fair that graduates should share some of the costs associated with their education, rather than those costs falling to the taxpayer alone. The system is designed to ensure that those who benefit contribute to the costs of higher education in proportion to the benefits that they receive from it. The motion raises the question of whether we should reduce tuition fees to £3,000. In our view that would be a big step backwards. We estimate it would cost the Government an additional £6 billion a year. The Government would have to choose whether to reduce funding to universities, reintroduce a cap on the number of students who could access higher education, or ask taxpayers, many of whom will be non-graduates, to pay that £6 billion additional cost. None of those options is palatable. We need our universities to be well funded so that they can equip our graduates with the skills and knowledge that they need to contribute to our economy.

[Carol Monaghan]

Will the Minister give way?

[Joseph Johnson]

I want to respond to the points made by the hon. Member for Poplar and Limehouse (Jim Fitzpatrick), and then I will give way to the hon. Member for Glasgow North West (Carol Monaghan). The hon. Member for Poplar and Limehouse clearly does not support the wholesale abolition of tuition fees, which I understand to be the present policy of the Labour party. However, I hope he will acknowledge that the most worrying effect of reducing fees to £3,000 would be to lower the participation of students from lower socioeconomic backgrounds. To lower spending and to control it in the context of rising demand for what would effectively be free higher education, the Treasury would push hard to introduce student number controls that we, thanks to our present student finance system, have been able to lift under our current arrangements.

[Carol Monaghan]

I thank the Minister for giving way. He mentioned who should pay the fees and shoulder the responsibility for that. If we ask taxpayers, “Do you want to fund this particular student £9,000 a year to go to university?” probably their answer would be no, but if we were to say, “Do you want to have teachers in our schools, nurses and doctors in our health service and engineers working on different projects, and your taxes will fund that,” I think the answer would be different.

[Joseph Johnson]

The Government recognise that the cost needs to be shared in proportion to the benefits that flow from higher education. There are public benefits, which the Government make a contribution to on behalf of taxpayers, and there are private benefits, which individual students should make a contribution to. We have a mixed economy for our higher education system, which makes it sustainable and fair.

[Carol Monaghan]

If the Minister is suggesting that the private benefits would be an increased salary, part of the increased salary would be an increased tax, so people would be contributing via their salary.

[Joseph Johnson]

Indeed they would, but it is also important that they make a direct contribution that relates to the benefit they have received, which has been provided for them by a public funding contribution.

[Jim Fitzpatrick]

I echo the point made by the hon. Member for Glasgow North West (Carol Monaghan). In response to the Minister’s challenge to me, he is right: I do not support full abolition, but neither do I support the £9,000 level. I think there is a balance to be struck. On his comment that the Treasury presses hard, I know it does. I have been in government; the Treasury always presses hard. The political choice that one makes, and that the Treasury and the Cabinet make, is how far it is allowed to press, and where the trade-offs are. The hon. Lady says that there should be contributions from elsewhere. The health service has suggested that we have golden handcuffs for those who want to qualify as doctors, and free them from their tuition fees to get them into the NHS and keep them there for the rest of their professional lives. Those choices and judgments have to be made.

[Joseph Johnson]

I would just note that higher education is a devolved policy responsibility in the United Kingdom. Those parts of the United Kingdom that have the present level of fees that we have in England have been able to lift student number controls. Other Administrations, which have made their own policy choices, have not been able to lift student number controls. As a result, under those Administrations we have seen far lower levels of widening participation than we currently see in England. We genuinely think that returning to a cap on student numbers would be absolutely disastrous for young people from lower income backgrounds.

[Richard Graham]

One crucial element in danger of being overlooked is that the lifting of the cap on student numbers has been extended in a particular direction, very constructively across the country. I refer to the policy on nursing degrees, and the new policy of nursing associates that complements it. Were it not for that, frankly my county of Gloucestershire, and those like it, would have a net deficit of about 350 new nurses per year. With the new policy, the University of Gloucestershire has been able to offer nursing degrees. Over time, that will result in far greater numbers of home-grown nurses than previously, and I am grateful to the Government for that.

[Joseph Johnson]

My hon. Friend is right: putting the funding of nursing places on to the sustainable basis that other students are on will enable far greater participation, and result in an uplift in the numbers of nursing students in this country.

Taxpayers already contribute around half of the costs of the higher education system. We believe that it is right that graduates should also contribute, and that that contribution should be linked to their income. As I have said, that means that those who have benefited the most from their education repay their fair share. The hon. Member for Leeds North West (Alex Sobel) gave us interesting insights from Latin America, which I know is a source of great inspiration for those in the Labour party at present. We look with interest to see what other lessons he draws from Venezuela and countries from that part of the world, as Labour develops its ever-shifting policy on higher education.

Every year, the Government consider the appropriate maximum level of tuition fees, and sets a cap. The Government consider whether the maximum tuition fee amounts should be uprated in line with inflation, to support continued investment in course delivery. We are committed to ensuring the ongoing sustainability of our world-class higher education sector. The student finance system ensures that teaching in our universities is well funded, but that individuals do not pay until they are seeing a good return on their investment. As I said, continued investment in the higher education sector has seen funding per student per degree increase by 25% since the 2012 reforms.

What is more, funding per student is today at the highest level it has been in almost 30 years. The recent decision to freeze the maximum level of tuition fees in the 2018-19 academic year takes account of the views of young people, their parents and Parliament. We have evaluated the current position of our universities, and on that basis, we have decided not to uprate tuition fees by inflation for the 2018-19 academic year. Students will therefore see maximum fees of around £300 less than if the maximum fee had been uprated with inflation.

The hon. Member for Reading East (Matt Rodda) mentioned that his constituents were struggling to repay the cost of their higher education. To help him put it in context, as a result of our decision to increase the repayment threshold to £25,000 with effect from April next year, if one of his constituents earns £30,000 per year, that constituent will be repaying about £1.20 per day. We think that is a reasonable amount for someone on that level of income to repay as a contribution towards the cost of their higher education.

[Alex Sobel]

Is it not correct that those earning far more will end up paying less because they will repay their loan much more quickly? The total amount of interest that they pay will therefore be far less than somebody on £25,000, who will take much longer to repay their loan.

[Joseph Johnson]

That is right. The amount that someone repays is linked to the amount that they earn in any one year, and the repayment will be more rapid for someone on a higher level of income.

The current student finance system removes the financial barriers for those hoping to study, and avoids students facing upfront tuition fee costs. We have maintained the universal accessibility of the system, which allows all eligible students to access the required finance, regardless of their background and financial history. Critically, monthly repayments depend on income, not on interest rates on their debt, or on the amount borrowed. From April 2018, we will increase the repayment threshold to £25,000, and adjust it annually in line with average earnings after that. That change will benefit around 600,000 borrowers, and will continue to benefit future borrowers. Many borrowers who have already graduated will see their monthly repayments reduced. That change forms part of a considered and costed proposal that reinforces the principles of our student finance system, and puts money back in the pockets of graduates.

[Richard Graham]

Those changes are important and will make a difference to a large number of people. There are, however, two matters on which my hon. Friend knows we do not entirely agree. One is the interest rate. When student loans revert to being repaid with normal interest, I do not see the argument for having them use the retail prices index as a base rather than the consumer prices index. My second point is a wider one. The universities themselves believe that they would be able to attract even more students from abroad—which would help the funding of our universities—were students to be excluded from the immigration numbers. Does he agree that that is something that we might look forward to one day?

[Joseph Johnson]

My hon. Friend raises some interesting points. A longstanding feature of the system has been that it uses RPI, as that includes costs that are relevant to the basket of goods and services that students consume, including housing costs and mortgage interest costs. That is why RPI has been embedded in the student finance system historically.

International students make a massive contribution to our higher education system, economy and society. They enrich the learning experience, and the Government welcome them warmly. We wish to see more international students come to study in the United Kingdom. Members will have seen some positive changes in the Budget, including an expansion of the tier 1 exceptional talent cap, and that route into the country. The Budget also contained measures to make it easier for students to flip into tier 2 after they have finished studying, which means that they can move into work straight after completing their studies, rather than waiting until they receive a diploma some time later. That will be particularly valuable for people doing postgraduate courses. The Government are taking steps to ensure that we have a competitive offer for international students, so that we continue to be competitive around the world in attracting international students.

The hon. Member for Glasgow North West suggested that the tighter controls on student numbers in Scotland were not restricting opportunities there. I know that she did not want to hear about the OECD’s PISA rankings, but she may be interested in taking note of what the Sutton Trust has said about student numbers in Scotland, and how, in its opinion, they have restricted the aspiration of young people in Scotland. The Sutton Trust recently stated that

“Scottish 18 year olds from the most advantaged areas are still more than four times more likely to go straight to university than those from the least advantaged areas”

in Scotland. In comparison, they are 2.4 times more likely in England. We obviously take note of the hon. Lady’s points, but she should not give the impression that social mobility in Scotland is being advanced by higher education policy there to a greater extent than by our policies in England.

[Carol Monaghan]

As I explained in my speech, much of the data on student movement is not captured by UCAS figures and is therefore not captured by the Sutton Trust’s report, so it is simply not a true reflection of the picture in Scotland.

[Joseph Johnson]

I take note of the hon. Lady’s comments. The Sutton Trust has been engaged in this area of study for many years and has had plenty of opportunity to take on board points from her party over the years, but it has evidently chosen not to do so.

The Government remain committed to widening participation in HE. England’s sustainable student finance system has enabled record numbers of disadvantaged 18-year-olds to benefit. As my hon. Friend the Member for North East Derbyshire (Lee Rowley) noted, in 2016 disadvantaged 18-year-olds in England were 43% more likely to go to university than they were in 2009, and the application rate for disadvantaged 18-year-olds increased to a record high once again in the 2017 entry cycle.

[Matt Rodda]

I am grateful for the Minister’s wide-ranging discussion of the issues. Will he meet employers from my constituency, and possibly from other high-cost areas, to address the issue that my hon. Friend the Member for Leeds North West (Alex Sobel) mentioned—namely, that graduates on middle incomes may end up paying more in tuition fee repayments over time than those on the highest salaries, and that that may have a damaging effect on local economies? I would be very grateful if we could meet the Minister and officials to discuss that matter.

[Joseph Johnson]

I am always happy to discuss these matters with colleagues. I will be keen to do so.

There is always more to do on widening participation, including on the progression of disadvantaged students to more selective institutions and ensuring that the retention, success and progress of some of those students is better. Universities have committed to spend £860 million on improving access and success for students from disadvantaged backgrounds through access agreements agreed for 2018-19 with the independent director of fair access. Through the Higher Education and Research Act 2017, the Government introduced measures to make further progress, including a statutory duty on the new regulator—the Office for Students—to have regard to equality of opportunity in connection with access to and success in higher education for students from disadvantaged and under-represented groups. We have also created a director for fair access and participation within the OFS as an executive board member.

Access and participation plans—the successor to access agreements—will ensure that any provider wanting to charge higher fees must have a plan agreed before they can do so as a condition of their registration with the Office for Students. The Act also created a transparency duty for all providers, which means that they will have to publish application, offer, acceptance, completion and attainment information, broken down by gender, ethnicity and socioeconomic background, so that all students can make an informed choice about which university they attend and so universities can see where they need to make further progress on widening access.

In his thoughtful speech, the hon. Member for Blackpool South (Gordon Marsden) rightly mentioned the numbers of part-time and mature students, as he has done on many occasions when we have discussed these matters. Studying part-time and later in life can bring enormous benefits for individuals, the economy and employers. That is why the Government are taking steps to help hard-working people who want to gain new skills and advance their careers by studying part time. The Government intend further to enhance the student finance package for part-time students by introducing part time maintenance loans in 2018-19. In the 2017 Act, we enshrined the need for the new higher education sector regulator to have regard to part-time study.

The hon. Gentleman also mentioned drop-out rates. Access to higher education is only one aspect of improving social mobility. The full benefits of gaining a degree are experienced only by those who actually complete their studies. Non-continuation rates for UK students at English institutions are lower now than they were in 2009-10 for all categories—young, mature, disadvantaged and black and minority ethnic students. Although progress has been made, the Government continue to look carefully at this area and are working with universities to focus on improving retention via the access agreement process and the teaching excellence and student outcomes framework, one of whose core metrics is non-continuation and drop-out rates, as the hon. Gentleman knows.

The Government are committed to removing access to finance as a barrier to entering higher education, which is why we continue to make more money available to students than ever before. Many hon. Members mentioned living costs. Students who started their courses this academic year—2017-18—have access to the highest ever amounts of funding to support their living costs at university. Our system deliberately targets living cost support at those from the lowest income families, who need it most. Replacing maintenance grants with loans— the theme of several Members’ remarks—enabled the Government to increase support for full-time students’ living costs by 10.3% for students on the lowest incomes in 2016-17, with a further 2.8% increase in such support for the current year.

With a view to the future, we are further strengthening our approach to widening participation by placing an overarching duty on the Office for Students to consider the promotion of equality of opportunity in relation to access and participation in all that it does. The new director for fair access and participation will have a clear role within the Office for Students to look across the student lifecycle.

The current student finance system is achieving our aims of widening participation and increasing the income that goes to the sector. As I said, funding per student, per degree is up 25% since the funding reforms at the beginning of the previous Parliament. The university system is better funded than it has been at any point over the past 30 years. The progressive nature of the system is ensuring that higher education is open to all people who have the potential to benefit from it. In all of this, the Government are ensuring that the costs of our system are split fairly between graduates and other taxpayers, with graduate contributions linked to income.

The current system has allowed the sector to grow and has made higher education accessible to a greater number of 18-year-olds from disadvantaged backgrounds than ever before. Reducing or abolishing fees would take us back to the days of underfunded universities and limited access for disadvantaged students, and would inevitably result in often hard-pressed taxpayers paying the bill for a system that would benefit the few, not the many: bad for students, bad for universities and poor value for money.

Question put and agreed to.

Resolved,

That this House has considered e-petition 182953 relating to university tuition fees.