Qualifications Reform Review

Lord Johnson of Marylebone Excerpts

Wednesday 18th December 2024 Lords Chamber

[Baroness Smith of Malvern (Lab)]

I thank my noble friend. He is right that there is something very arresting for a new Member of the House of Lords and a returned Education Minister to attend a meeting with my noble friends Lord Blunkett, Lady Morris, Lady Blower and Lord Knight, all of whom are very expert in this area. I am glad that he thinks I at least listened and understood what they said to me.

My noble friend is right that of the qualifications that we started looking at, of which about 460 were due for defunding by 2026, about 200 had very low enrolments: 100 or fewer students. We have largely managed to remove those from the qualifications landscape. It is probably still the case that that landscape is overly complex for students to be able to work their way through, but we kept 157 of the qualifications that were previously proposed to be defunded.

On the point about the curriculum and assessment review, as I touched on earlier, that review has within its remit the consideration of the assessment routes for 16 to 19 year-olds, and—responding to a point made by the noble Lord, Lord Willetts, which perhaps I did not address previously—a particular emphasis on ensuring that our curriculum and assessment routes enable everybody to succeed, including those who are disadvantaged and those with special educational needs and disabilities. For that reason, it will focus carefully on bringing forward recommendations about what the assessment route should look like for students post 16, and we will reflect on those and use them as the basis for further decisions about how to ensure that our qualifications for 16 to 19 year-olds are suitably rigorous, suitably accessible and provide appropriate choice for students.

[Lord Johnson of Marylebone (Con)]

My Lords, like others on all sides of the House, I very much welcome the Government’s rapid work to lift much of the uncertainty over the defunding of applied general qualifications. It would be hugely beneficial if the Government went a little further and were absolutely explicit that this is not just a stay of execution until 2027 but that there is a long-term place for these qualifications in our education system. That is my first point. The second point is: can the Minister show similar rapid work in lifting the uncertainty over how the growth and skills levy will interact with the lifelong learning entitlement, and if not now, say when the Government will do so?

[Baroness Smith of Malvern (Lab)]

I do not think it is appropriate for anybody—I do not think the noble Lord would have done it—to say that there would never be any development or new qualifications introduced into the 16 to 19 landscape or that there should ever be any ending of any qualification. So the qualifications landscape should not be set in stone. However, I can repeat, as I said to his noble friend, that the Government do not envisage a qualifications landscape in which there is only a choice of T-levels or A-levels. That is one of the reasons why the work of the curriculum and assessment review in setting out its views on what should remain in order to provide appropriate routes for young people will be the basis for any future decisions made there. It is my view that there will always need to be qualifications that are neither A-levels or T-levels, but they need to be of sufficiently high quality to ensure that we are not selling short the young people who take that route.

No sooner have we solved one problem than the noble Lord quite rightly pushes us to get on to the next one. Skills England is currently consulting on some of the current flexibilities that we will be introducing to develop the growth and skills levy, and of course we are also working hard on the implementation of the lifelong learning entitlement. I hope it will not be too long before we will be able to say more about both of those and, as the noble Lord also suggested, how they will link together. But I will just have a little break over Christmas before we come back to do that, and I hope all noble Lords also have a very restful break when it comes.

Higher Education Sector

Lord Johnson of Marylebone Excerpts

Wednesday 4th December 2024 Lords Chamber

[Baroness Smith of Malvern (Lab)]

The noble Lord is right that it is important that the graduate route visa has been protected. It allows international students, in the case of PhD graduates, to stay for an additional three years to contribute and look for work. I think that that is appropriate, given the contribution that they make, as the noble Lord says.

[Lord Johnson of Marylebone (Con)]

My Lords, I draw attention to my interests on the register. I share the shock of my noble friend Lady Barran at the OfS’s decision to suspend applications to the register. This sends a terrible message to investors around the world and will deter institutions that want to follow trailblazers such as Dyson, NMIT, LIS and TEDI in bringing innovation and choice to our higher education system. If the Office for Students cannot handle the duties that Parliament has given it, should it not delegate back to the Quality Assurance Agency the quality assurance function that it has taken from it?

[Baroness Smith of Malvern (Lab)]

Well, I simply reiterate the point that it is important that this Government have gripped the issue of financial sustainability and have asked the OfS to focus on it. The OfS has made its decisions about where to focus its capacity to enable it to do that. I take seriously the point that the noble Lord made, but it is the role of the OfS as the regulator of the sector to regulate, to ensure that we have the sort of quality that—I disagree with the noble Lord—will continue to attract students, researchers and others into the UK.

Institute for Apprenticeships and Technical Education (Transfer of Functions etc) Bill [HL]

Lord Johnson of Marylebone Excerpts

Committee stage
Tuesday 26th November 2024 Grand Committee

[Baroness Wolf of Dulwich (CB)]

My Lords, I support this amendment. Indeed, I express strong support for all the amendments that have managed to get themselves tabled in spite of the language of this Bill, which at this point are just calling for report. It seems quite extraordinary that, at a time when we have a Government who recognise the centrality of skills and have committed to a system-wide approach—as in today’s White Paper, for example—we are being asked to pass legislation that puts everything inside the department, reported to a DfE official, so that under this Bill there is not even a report for other government departments, never mind for the public at large and for Parliament. I cannot believe that this makes sense in terms of the Government’s expressed ambitions for Skills England: that it should be system-wide; that it should do something that goes beyond the remit of individual agencies and quangos; and that it should take in the whole scene effectively. I would very much prefer to see it as a statutory body, but I hope that, between now and Report, the Minister will at the very least take away this widely expressed request for us to have regular public reporting of what is going on, which everybody can use, so that we have documents in the public domain allowing us to see what is happening and how the Secretary of State’s new responsibilities are being carried out.

[Lord Johnson of Marylebone (Con)]

My Lords, I add my support for Amendment 36 in the name of the noble Baroness, Lady Barran. Like other amendments, it calls for—among other sensible things—a report, in this case on levels of investment in skills by employers.

If you have believed the CBI over the past few days, you would think that the investment climate for business had taken a turn for the worse in recent weeks, with what it is calling the “triple whammy” of increased employers’ national insurance contributions, the higher national minimum wage and various changes in labour market rules. The CBI feels that there is a palpable sense in the business community that the UK is becoming a more difficult environment for investment. Of course, skills are very much part of that picture. There is a clear risk that our levels of investment in skills, which are already running at half the levels of our peer group in the OECD, will suffer further if this climate of paralysis in the UK with respect to business investment is allowed to continue.

On the uncertainty that noble Lords have alluded to with respect to big government policy, notably the development of the growth and skills levy and the future of the LLE, these things may become compounding factors that risk current low levels of investment in skills dipping even further. Clearly, we cannot afford that as a country, so I believe it is vital that the Government take steps as rapidly as possible to lift the policy uncertainty that will potentially blight levels of investment in skills over the current year and accept the amendment, which will provide a healthy baseline against which we can measure progress in this respect in the months to come.

[Lord Hampton (CB)]

My Lords, I have a tactic nowadays of speaking towards the end, when everybody else has said it better than I can. I just want to add that I have put my name to Amendment 18, and I agree with Amendment 23 and pretty much everything that includes the word “reporting”.

I am slightly concerned that our positions became entrenched in the last day in Committee, and that nimbleness is seen as being reduced by reporting. There is a lot that we do not know and a lot that we need to know. In my own profession of teaching, we have to teach with the door open and, at any time, somebody senior could come in, observe your lesson and give you formal feedback. At the very least, you get one formal observation a fortnight and—let us face it—we all work better with that kind of incentive. Skills England needs to be held to account; otherwise, we are looking at it being held to account by Henry VIII.

Institute for Apprenticeships and Technical Education (Transfer of Functions etc) Bill [HL]

Lord Johnson of Marylebone Excerpts

Committee stage
Thursday 21st November 2024 Grand Committee

[Lord Aberdare (CB)]

My Lords, I very much support the intention and aims underlying the Bill; namely, to create a new and more effective UK skills system, with Skills England at its heart, to replace the current system—if you can call it a system at all—which is complex, fragmented, lacking in clear measures of success, and failing to deliver the skills we need.

The King’s Speech spoke of a Skills England Bill and that promise is surely not met by a Bill which does not mention Skills England at all. It has required considerable ingenuity on the part of several noble Lords to produce amendments that do mention Skills England and are deemed to be in scope.

The Bill focuses entirely on abolishing IfATE and transferring its functions—not to Skills England but to the Secretary of State—but it says nothing about the role, status and powers of Skills England, to which presumably these functions will in due course be passed, nor, as other noble Lords have mentioned, about how Skills England will combine the essentially practical, administrative and awarding functions it inherits from IfATE with its much broader and important role of aligning the skills system with the aims of boosting growth and spreading opportunity.

I feel some sympathy for the amendments from the noble Baroness, Lady Barran, to remove Clauses 1 to 3 and their respective schedules, because they and other amendments address the fundamental issue of how Skills England is intended to work, how we are supposed to get there from here—I was interested in the point made by the noble Baroness about the interregnum—and what the transition plan is.

I would prefer Skills England to be a statutory body, with sufficient authority and independence to fulfil its vital mission across the numerous government departments and other bodies involved and to bring together the demand challenges that employers face with skills shortages and so forth, given that the education and training systems are not delivering the skills we need to meet that demand.

For those reasons, I have considerable sympathy for Amendment 21 in the names of the noble Lord, Lord Storey, and the noble Baroness, Lady Garden, and for Amendment 33 in the name of the noble Baroness, Lady Barran, which would ensure the establishment of Skills England, preferably as an arm’s-length body.

It is frustrating that there are so many key aspects of skills policy that we need to talk about, as well as the role of Skills England in delivering that policy—I welcome the principle—but the Bill doesn’t enable us to discuss those things. I therefore hope that the Minister will shed more light on how Skills England is expected to tackle the current mismatch between employer needs and education provision, including plans for the comprehensive strategy for post-16 skills promised in the manifesto.

[Lord Johnson of Marylebone (Con)]

My Lords, I want to speak to the amendments tabled by my noble friend Lady Barran, raising the issues that arise from the fact that Skills England, for all the hype, is to all intents and purposes the DfE. As others have mentioned, it will not have a statutory basis of its own. It might have a grand name and have been billed heavily in advance by the Government, but it is not a non-departmental public body which would be legally separate from the department and staffed by public servants rather than civil servants; it will be created by simple administrative action rather than legal instrument, meaning that it is basically just the department.

Executive agencies, of which Skills England will be one, are units of central government, perhaps administratively distinct to some extent but remaining legally very much part of it. What does this mean in practice? In some ways, it could be good. Potentially, it means a shorter feedback loop into Ministers’ red boxes, where responsibility for overarching skills policy rightly resides—there will be no room for excuses; the buck will stop with the Secretary of State for Skills England’s performance; and there will be no excuses for any failure of Skills England to work successfully across government departments and to corral Treasury to fund our skills system appropriately. However, that is the upside and, to be honest, I think there is potentially rather more downside from this change, because it is a misdiagnosis of where priorities need to be right now.

A prerequisite for a successful skills system is a reasonable degree of stability and certainty necessary to get businesses to invest in training, and there is no doubt in anyone’s mind that our businesses are not investing enough in training their workforce—as we all know, we are spending less than half the OECD average. Instead, we have near-permanent policy churn in this area. Supposedly once-in-a-generation reforms take place nearly every Parliament, sometimes every other year, creating chronic instability in the policy framework for investment for skills.

Now we have a massive machinery of government change with the abolition of IfATE, which was created less than seven years ago. Machinery of government changes are rarely worth the cost, disruption and distraction from other necessary priorities. This really is not what we should be debating right now. Machinery of government changes are no substitute for Ministers driving their teams hard, doing the difficult work of policy development and securing funding for skills from a very sceptical Treasury.

I am worried, therefore, that we are losing focus on the real issues. To my mind, there are two very big areas where I would prefer us all to focus our attention right now. The first is securing clarity from the Government on their plans for the defunding of applied general qualifications. I appreciate that there has been considerable movement from the Government on this matter since they took office in July, but further clarity is still needed on which qualifications that were due to be defunded next year will now be retained and when providers will get that vital information.

The second area I would prefer us to focus on is how we can end the confusion over the future of the lifelong learning entitlement, which has been delayed yet again in recent weeks and now will not start until sometime in 2027, and the provision by the Government of a clear statement as no one knows how the LLE will interact with their planned new growth and skills levy. These are two really important reforms and there is a desperate lack of clarity across our system on how they will work together. I would be very grateful if the Minister could help us with those two issues and take the opportunity to confirm that, in her mind, the LLE will still deliver the skills revolution that the last Government wanted from it and that Skills England will not quietly be asked to kill it off in the months to come.

[Baroness Blower (Lab)]

My Lords, in rising to speak very briefly in this debate, I apologise for the fact that I was not at Second Reading. Most of the points that I sought to make have already been made. Therefore, I do not need to repeat them, save that I am sure that there is an absolute commitment in this Room that what we need is high-quality skills training and education and that no one would demur from that. The differences—or possibly the similarities—across the aisle are that we want to make sure that it is done effectively and as speedily as possible while ensuring it is done properly.

I am very sympathetic to the view expressed by my noble friend Lord Knight about the consideration that might be given to a statutory body. Some noble Lords who know my history may know that I have not always been a great fan of everything being held in the hands of the department or the Secretary of State—obviously, it depends on the Secretary of State. In this case, we can afford, if we to make a move, to think about making the appropriate move. From the discussions that I have had, it seems that the appropriate move from where we are would be to a statutory body, for all the reasons that a number of speakers have outlined. That may well confer a greater sense not just of stability but of consistency, which is where we need to be if we are to carry with us young people, their teachers, their parents and employers, who are all extremely concerned, and to ensure that we have excellent skills provision and skills acquisition in this country.

--- Later in debate ---

[Baroness Garden of Frognal (LD)]

My Lords, I added my name to the amendment from the noble Lord, Lord Lucas, on the importance of a chief skills adviser. As I have said before, skills always need advocates within government because it has a predominantly university-educated membership. This role could be key to ensuring that skills changes will be enacted by someone who can take a view over the country of which skills are in short supply in which areas and need local support. The network of skills advisers in all departments that the noble Lord proposes would be a great way forward, and I support the amendment.

[Lord Johnson of Marylebone (Con)]

My Lords, I shall speak briefly. I think that this amendment is worth very serious consideration. When I was Science Minister, I saw up close—as the whole country did during the pandemic—the value of the Chief Scientific Adviser and the network of scientific advisers across government departments. They play a really useful role in ensuring that policy is informed by the strongest possible understanding of science and in bringing the scientific method to policy-making. They have had a huge impact and made a huge contribution.

However, I would just flag that this raises an interesting question about what exactly the role of Skills England is. My understanding, from what the Government have said so far about Skills England, is that it was meant to be a body working across government and doing the difficult job of ensuring that all the different interests of different government departments in the skills agenda are given appropriate balance and focus. To my mind, that may be somewhat duplicative of what Skills England is itself seeking to do. In that sense, it may be a perfectly good alternative to Skills England if you have a chief skills adviser, informed by skills advisers in the various departments, feeding into the DfE; then, you may not need the horizon-scanning, policy-making function that Skills England is proposing to offer. I suggest that you have either one or the other; you probably do not need both.

[Baroness Barran (Con)]

My Lords, I am grateful to my noble friend Lord Lucas for setting out so clearly the case for the appointment of a chief skills adviser and a network across government departments. However, I also have a lot of sympathy with the remarks from my noble friend Lord Johnson about the risk of duplication. In a way, this debate has made me feel like we are coming back to Clause 1 of the Bill, which I promised not to do, and to the appetite for understanding the Government’s thinking about how Skills England will work in practice. Clearly, this is a kind of alternative model.

I will make just a couple of brief points. In the previous Government, we benefited from the advice of Sir Michael Barber in his role as an adviser on skills policy delivery. My first point on that concerns the importance of the word “delivery”. His focus was on the delivery of skills policy. We all know that writing a great policy document is about 10% of the task while about 90% is effective delivery of that policy at scale, in real life. On behalf of my former colleagues in the department, I thank Sir Michael for his excellent advice in this regard; I had only one conversation with him but I have thought about it and used his advice many times since.

My second point is that Sir Michael reported not only to the Secretary of State for Education but to the Chancellor of the Exchequer. I wonder whether that is something that the Minister might consider.

Universities

Lord Johnson of Marylebone Excerpts

Thursday 14th November 2024 Lords Chamber

[Lord Johnson of Marylebone (Con)]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Warwick of Undercliffe. I am delighted that she has secured this timely debate on the future of our higher education system. It is timely because the financial condition of the sector is worsening very rapidly. She mentioned in her excellent remarks that 40% of universities are likely be in deficit next year and that a further, or perhaps the same, 40% have low liquidity of less than 40 days’ cash. Updated analysis suggests that as much as three-quarters of the sector will be in deficit next year, suggesting that conditions are deteriorating extremely rapidly. Like the noble Baroness, I welcome the Government’s move to increase fees with inflation for the next financial year. It is an important step. It is a shame that it has taken this long, and it is a shame that, as she said, the sector has had almost a decade of real-terms erosion of undergraduate tuition fee income. I am glad that this decision has at last been taken. It was a real abdication of responsibility on the part of more recent Governments to have let this issue drift in the way that it has. It is no way to provide certainty for institutions vital to our success as a knowledge economy and, as she remarked, has led to needless job cuts, programme closures and increased dependence on the volatile income from overseas students, welcome though they are.

Above all, the freeze in fees has been detrimental to students themselves, who have, in many cases, seen their institutions lack the resources they need to provide them with the high-quality teaching and wraparound support they want during their studies. That is why I echo the noble Baroness’s pleas for the Government to ensure that the uplift in tuition fees is undertaken on an ongoing basis throughout this Parliament. People can disagree on whether it was an easy decision for the Government to take. Personally, I think that an automatic uplift of tuition fees with inflation should not be a big drama in our system. It is a real cost that institutions experience. The Government need to recognise that and accept their responsibilities towards institutions that are critical to our performance as a highly innovative economy.

The OBR forecasts inflation of 2.6% next year and a further 2.9% in 2028-29. This is an ongoing issue and the Government cannot simply leave the uplift as a one-off. If it is treated as such, it will deliver about £1.5 billion of additional income to the sector over the course of this Parliament to 2029-30. However, that does not in itself address the issue of real-terms erosion of institutions’ income. They will continue to see a real-terms erosion of income per student of 11.4% over the course of this Parliament if the Government do not continue to uplift fees with inflation in the later years of this Parliament.

The real-terms hit will be all the greater for the probably quite considerable number of institutions that find themselves unable to pass on this increase in tuition fees this coming financial year because they are too late to update the contractual position to students to whom they have offered places already. I would be grateful for the Minister’s thoughts on this and whether she has made any assessment of how many universities will actually be in a position, at this relatively late stage, to uprate their fees for this coming financial year.

It is clear to me that, as the noble Baroness said, many institutions will not just be barely standing still following this one-off uplift; many will be going backwards. The net position, as a result of the other recent policy changes, including the increase in employer national insurance contributions, suggests that the sector overall will be down rather than up. I have seen analysis that suggests that the sector will bear almost £400 million in increased costs from national insurance contributions, compared with increased income for English providers of only £300 million, so it is clearly not assisting the Government overall at this stage, even though, as I said, I welcome the move to increase the fees. Perhaps the Minister might indicate how much of the fee increase, if any, will be left for universities following the rise in NICs.

The last few weeks have not been a bonanza for the sector by any means. That said, it needs to accept accountability for the additional public money being invested in it. The write-offs associated with the increased fees could amount to about £450 million over the course of this Parliament, and it is important that the Government continue to ensure that there is robust quality assurance and assessment of where institutions are delivering value for money and high-quality teaching in their performance. I am glad to see that the TEF, as well as B3 metrics, will continue to play an important part in that respect.

Higher Education Funding

Lord Johnson of Marylebone Excerpts

Thursday 12th September 2024 Lords Chamber

[Lord Johnson of Marylebone (Con)]

My Lords, I congratulate the noble Lord, Lord Krebs, on securing this important debate. As ever, I find myself in very strong agreement with my noble friend Lord Willetts, who I note incidentally may not be the only candidate in this House for the role of Chancellor of the University of Oxford but is the only one who, day in, day out, demonstrates his commitment to the future of the sector and would be absolutely splendid in that role, were he to be successful in that campaign.

I turn to the issue at hand. I want to say right at the outset that I truly welcome the change in tone from the new Government towards the university sector. It is a wonderful breath of fresh air not to have the negativity and university-bashing that has characterised too many of the airwaves from the previous Government.

In particular, I warmly welcome all the positive messages that the new Government have been sending out about international students, who make such a huge contribution to the success of our higher education system, society and broader economy. That said, I of course agree with others, including the noble Lord, Lord Krebs, who have pointed out that we should avoid an excessive dependency on the fee income from international students. We need to put in place a funding system that is sustainable and does not leave us exposed as a country to volatility and factors well beyond the control of the sector itself.

However, I do not think we need a long, two-year review to come to a conclusion as to what a sustainable system is. My view remains very much that the current model, as Winston Churchill might have put it, is the worst imaginable—except for all the others. There is essentially nothing wrong with it. It does the job you need a funding system to do in three key respects: it maintains the unit of resource, potentially, for what we need to have a world-class HE system; it is fair to the taxpayer; and it removes barriers to access because, as my noble friend Lord Willetts said, fees are not paid upfront by the student but underwritten by the Government in the form of a loan. There is nothing structurally wrong with the model we have, except for two flaws, which are fixable: first, it is not inflation-proof and, secondly, there is no link to quality. We fund volumes—bums on seats—rather than outcomes; clearly, that is unacceptable.

The Cameron Government tried to address those two flaws and, in 2017-18, we allowed a system whereby fees were indexed with inflation, but only for institutions that were able to demonstrate high-quality outcomes as assessed by the teaching excellence framework. I strongly think that we should return to that model. Had we continued with that system over the past six years, many of the institutions that are now forced to make these rationalisations would not be doing so. A mid-sized institution such as Teesside would have £30 million a year of additional tuition fee income, had we continued to upgrade tuition fees in line with inflation over recent years. Such a system is, frankly, the only game in town and everybody needs to get real and recognise that, given the current fiscal environment.

There is not a chance in hell that we are going to return to a system of funding tuition fees through the teaching grant. There is a political window now, early on in the Parliament, for the new Government to put in place a progressive ratchet of fee uplifts with inflation over the next few years, and I urge them to do so.

Higher Education (Industry and Regulators Committee Report)

Lord Johnson of Marylebone Excerpts

Tuesday 21st May 2024 Grand Committee

[Lord Johnson of Marylebone (Con)]

My Lords, it is a pleasure to follow the noble Lord, Lord Freyberg. I echo the points he just made about the creative industries and the need to measure properly value for money in that respect. I declare my interests as a visiting professor at King’s College London, chairman of FutureLearn, and someone who, in my previous ministerial role in the other place, was very much involved in the creation of the OfS and the high-level regulatory framework it is now implementing. I come at this with a certain baggage, and I lay that on the table; your Lordships do not need me to be clearer about it.

I very much want to defend the OfS rather than join the chorus of people seeking to bury it and condemn it for problems which, by and large, are not its responsibility but the responsibility of government policy. It is important that we are very clear in assigning responsibility correctly in this debate as we consider this report.

As the noble Lord, Lord Norton, said in his excellent speech, we have in the UK a world-class higher education system. It is one of our greatest national assets. However, it has some faults: some resistance to accountability, a quickness to take affront at suggestions that there are areas for improvement, and occasionally some short-sightedness in the way it opposes legitimate demands for reform. I fear that the report resulting from this inquiry is to some extent evidence of that phenomenon, because the inquiry and the report that came out of it were in part—probably quite a considerable part—the result of some very self-interested lobbying by university mission groups whose universities have over the years been very well represented in this place.

I am not saying that there is not room for improvement in the way the OfS operates—of course there is. However, it is also important that we do not lose sight of what this report is in part—not in totality—all about. We have to be honest that the report and the inquiry that led up to it are in part a continuation of battles that many in the sector and in this place waged against the very creation of the OfS in the first place.

Just to take us back a little, the fight about the OfS was actually about the change from a funding council acting on behalf of providers to an independent market regulator looking out for the student interest. This shift, as the OfS’s brilliant first chair Michael Barber noted in his evidence to the committee, was very much overdue given the massification of the sector and the change in the tuition and maintenance funding regime from one of government grants to income-contingent loans. My view is that for as long as we have a mass higher education system, as we will have, and this system of funding—to my mind, these two things are very closely and inseparably linked—we will need an independent market regulator rather than a funding council model.

Many in the sector and perhaps in this place might romanticise the Higher Education Funding Council for England. Indeed, there was a lot that was great about it, including its formidable last chief executive, Madeleine Atkins. But of course, by the middle of the last decade it had long passed its sell-by date as a mode of regulation for the sector. Indeed, in some senses it did not even recognise itself as a regulator. It came out of the University Grants Committee model, which was suited to a very different world of very small, limited tertiary participation and a much smaller, narrower system of university providers.

HEFCE was good for a world that had passed, but it was no longer fit for purpose for an era of mass higher education. Its function was very limited: to spread available grant funding around the providers in the system to ensure that everybody got a fair crack at the funding that the Treasury was making available. What HEFCE was not effective at was acting as a regulator to promote quality, choice and competition in the student and taxpayer interest. It is not going too far to say that there is a general consensus that, by the end, HEFCE had become essentially captured by the sector and urgently needed reform.

That is the backdrop to why the OfS was set up. Of course, this was not a popular change in the sector. The battles leading up to the passage of the Higher Education and Research Act 2017 were ferocious. It was one of the most heavily amended bits of legislation in recent memory. We should not ignore all that history, including the way the sector and its outriders lobbied hard against the new accountability regime that the Office for Students represented. To some extent, there are undertones of all that lingering around today at the five-year to six-year mark.

The creation of the OfS represented a move away from co-regulation to something that is much sharper and has greater consequences for institutions that deliver poor quality and poor student outcomes. All the stuff about co-regulation and how it is a better approach is, to my mind, a thinly disguised plea for self-regulation—a stance that I do not think any party in government will return to. As I said at the start, as long as we have a mass higher education system funded by a system of income-contingent loans—we will have this for the foreseeable future because it is the least bad system and is the only game in town from a fiscal perspective—we will need an organisation such the OfS acting in the student and taxpayer interest.

As Michael Barber told the committee, many universities thought that, notwithstanding the clarity of its legal duties, the OfS would be HEFCE under another name. They were very wrong and were surprised to discover that it was different. Some in the sector might think that, if they undermine the OfS enough and throw enough mud at it, they will suddenly get nice old HEFCE back, with its big pot of grant money administering the teaching grant and a system of student number controls that constrains competition and choice and allocates students to providers on the basis of government quotas. That is highly undesirable as an objective and highly unlikely to arise as government policy.

Even in the unlikely event that a future Government did want to replace our current funding system of income-contingent loans and return to a world of grants, they would still want an independent regulator to ensure value for money for taxpayers and hold universities to account for quality and outcomes in a mass higher education system in pretty much the same way the Office for Students does. Although the student focus of the regulator might change in such a scenario, I do not believe that any Government will return to the funding council model of the past.

Respectfully, I disagree with the report’s main contention that the Office for Students is performing poorly. To be honest, I think that Michael Barber and Nicola Dandridge did a brilliant job in leading the establishment of the new regulator in very difficult conditions, which their capable successors are continuing. I remind Members that its initial priority was to set up the new organisation. It managed the considerable task of registering a large numbers of providers at pace and putting in place the new regulatory framework in its first strategy. It then coped admirably with the challenges of the pandemic, suspending some of its regulatory requirements while providers adapted to the changed environment.

In its second strategy, the OfS has moved on to focus on quality. This has seen it reset the TEF, toughen up the B3 outcomes metrics, and reset the indicators for non-continuation, completion and progression. Again, that has generated a fair amount of angst in the sector, but this is absolutely necessary in terms of both the student interest and upholding quality and standards in the sector.

I do not want people to think that I am just a lackey praising the OfS without any self-awareness or criticism. I recognise that it has problems and is not in all respects operating as well as it might. I will be brief: there are three areas that I would focus on. The first is the question of distance from government. The problem here is not the OfS but the DfE—I say that with all respect to the Minister. The problem is clearly Ministers. It is also about where universities sit in government. The mistake is to have universities in the Department for Education, which does not understand institutional autonomy and treats universities like failing schools. My noble friend Lord Willetts made the point before.

In his great report on higher education sometime in the early 1960s, Lionel Robbins warned against moving universities to the education department because he feared that such an interventionist department would not understand or value the autonomy of universities. His warning has proved sadly accurate. The DfE treats universities like poorly performing secondary schools and now intervenes in them so much that the Office for National Statistics may well propose bringing universities back into the public sector.

When I was working on the HERA legislation, I was lucky enough to be Minister for both universities and science, like my noble friend Lord Willetts was when he was in the other place, with responsibility for both aspects of government policy towards the sector. That coherence has to some extent been lost by the move to the DfE and the splitting of ministerial responsibility in that way. It would be preferable to have universities back in a growth department of government, such as the business department or the new DSIT, where universities would be reunited with the rest of the research base.

The layering on of ever more conditions of registration has become slightly crazy. Ministers should adopt a self-denying ordinance of one in, one out—or better still, one in, two out.

My second area for improvement is that the Office for Students has to do much more to support innovation and promote new forms of provision. Now that it has established its bona fides as a tough and independent market regulator it has space to address parts of the role that Parliament has given it that have been neglected in the first five years. New providers—I have been intimately involved with a number—have been stunned by the bureaucracy they encounter in trying to get on to the register and establish new modes of provision. The consultants they have to recruit to advise them tell them that to succeed with the OfS they must, above all, look as much like an established university as possible. This is hardly the recipe for innovation that we want in our system.

My final point is that the Office for Students must make a real go of the lifelong learning entitlement. This policy is flailing at the moment. I think the name of the Office for Students should change to the office for lifelong learning, and it should grip this policy urgently so that it has a fighting chance of delivering the skills revolution that Ministers say they want for it. The detail of how that might work is for another day but that is an urgent priority.

I urge anyone in this Room who believes that the solution to the sector’s troubles is to attack and dismantle the Office for Students to think again. A strong regulator that enjoys the confidence and trust of the sector and of government is vital to the future of our HE system. Everyone should focus on working hard to that end.

Universities: Financial Sustainability

Lord Johnson of Marylebone Excerpts

Tuesday 21st May 2024 Lords Chamber

[Baroness Barran (Con)]

I appreciate that, but the noble Lord will also understand the pressures that students face. We also have a responsibility to students to make sure that university is affordable.

[Lord Johnson of Marylebone (Con)]

My Lords, I declare my interest as a visiting professor at King’s and chairman of FutureLearn. If the Prime Minister goes ahead with curbs to the graduate visa, would my noble friend the Minister say how we will replace the £12 billion in economic benefits that international students bring to priority category 1 levelling-up areas, including towns such as Stockton, Middlesbrough and Darlington, which receive £240 million of benefits every year from international students at Teesside University?

[Baroness Barran (Con)]

With respect to my noble friend, he makes a very speculative statement, which makes it pretty hard for me to comment on it.

Higher Education: Arts and Humanities

Lord Johnson of Marylebone Excerpts

Wednesday 1st May 2024 Lords Chamber

[Baroness Barran (Con)]

As the noble Baroness knows, the Government strive to create a sustainable student finance system that both remains responsive to the needs of the wider economy and of the labour market, which she referred to, and is fair to students and taxpayers. As she remarked, those with creative and critical-thinking skills in relation to AI are of course important, but so are students with STEM skills.

[Lord Johnson of Marylebone (Con)]

My Lords, ahead of the local and mayoral elections tomorrow, would my noble friend the Minister say what the impact of slashing the graduate route will be on arts and humanities provision, as well as on the levelling- up agenda? I am thinking specifically about towns such as Middlesbrough and Darlington, where every intake of international students at Teesside University brings £240 million of benefits each year to the local economy.

[Baroness Barran (Con)]

My noble friend is aware that we remain absolutely committed to our international education strategy, which has been extremely successful in terms of both the number of students who study in this country and their contribution to the economy. I cannot comment on the specifics of individual towns, but we absolutely recognise the value that those students bring.

Student Loan Interest Rates

Lord Johnson of Marylebone Excerpts

Wednesday 27th March 2024 Lords Chamber

[Baroness Barran (Con)]

I come back to my earlier answer: we have a system in which it is very clear that above a certain threshold, 9% of income goes to repaying part or all of a graduate’s debt. The overall package, obviously, in terms of affordability of mortgages and housing, is dependent on many issues, of which graduate debt is one.

[Lord Johnson of Marylebone (Con)]

My Lords, the Government’s excellent recent reforms to the student loan book have significantly improved its affordability to the taxpayer, with less than a third now expected to be written off. Given this, and given the funding crunch facing universities—which will be worsened if the Government take a hatchet to the graduate route, by the way—does my noble friend the Minister agree with me that it is time to allow universities to increase fees in line with inflation for those that can demonstrate they are delivering great outcomes for students, as assessed by the teaching excellence framework?

[Baroness Barran (Con)]

As my noble friend touched on, the Government are trying to balance, or triangulate, a number of things. One is affordability for students, hence the freeze we have had for seven years on fees. Another is addressing poor-quality provision—at the other end of the issue from the one my noble friend raises—through the new Office for Students regime. In relation to motivation, reward and recognition for the highest-performing institutions, a review of allowing indexation of fees based on the TEF is not under consideration currently, but I will say that having a high-quality teaching framework does allow for strong recruitment and research income.