Small and Medium-sized Enterprises: Student Work Placements

Lord Stevenson of Balmacara Excerpts

Monday 16th July 2018 Lords Chamber

[Lord Agnew of Oulton]

My Lords, as someone who has run SMEs for nearly 40 years I can speak with some commitment to that important part of our economy. My noble friend is right that it can be more difficult for a small business to accommodate these sorts of placements. However, they can also be much more flexible and give a young person much more exposure to every aspect of that business. As I mentioned, we are providing the resources and guidance to employers, and this whole programme will develop over the next couple of years.

[Lord Stevenson of Balmacara (Lab)]

My Lords, approximately 800,000 young people who are eligible to take T-levels are coming through the system, and it seems that the pilot schemes are operating in the tens of thousands, not the hundreds of thousands, as might be required. That aside, the cost of this will be significant; we are talking about a three-month placement period, not a matter of a few days. How will the Government fund this?

[Lord Agnew of Oulton]

My Lords, we have already announced substantial funding for the T-level programme, and there are a number of key components of it, such as the technical knowledge and practical skills that are specific to a chosen industry or occupation, and an industry placement of at least 45 days in students’ chosen industry or occupation. In March of this year the Chancellor of the Exchequer announced a specific amount—I think it was £80 million—to assist SMEs in making these placements available.

Higher Education and Research Bill

Lord Stevenson of Balmacara Excerpts

Ping Pong (Hansard): House of Lords
Thursday 27th April 2017 Lords Chamber

[Baroness Wolf of Dulwich (CB)]

My Lords, first, I should declare an interest as a full-time Academic Council member of King’s College, London. I had not expected to speak in this part of the debate and I am afraid that I will be speaking again later. But, since I am on my feet, I would like to say that I agree with all noble Lords who have expressed their appreciation of how the Government have listened to opinions and to the House generally. I, too, feel that we have come a long way. In this context, I will bring back a couple of points that were made in the earlier debates by the noble Duke, the Duke of Wellington, and by me in the context of amendments that we had tabled. Since the noble Duke is unable to be here today, I will make them briefly on behalf of us both.

Along with almost all noble Lords here, we strongly welcome the delay in implementing the link with fees—here I endorse the remarks of my noble friend Lord Kerslake. I am delighted to hear that we are moving quickly towards a position where we will have subject-level rather than institution-level assessments. However, one reason we became so concerned about the TEF is that putting a label on an institution is potentially very damaging to it.

One thing that has been rather an eye-opener for me is the extent to which—perhaps inevitably and as someone who teaches public management I should not be surprised—the “sector” is, in the view of the Government, the organised universities and Universities UK, and how few good mechanisms there are for the Bill team and the department to get the voices of students, as opposed to occasionally that of the National Union of Students. Students have been desperately concerned about this, because they are in a world where they pay fees and where the reputation of their institutions is so important. They have been worried about and deeply opposed to anything that puts a single label on them. This single national ranking caused many of us concern.

I will say a couple of things that I hope the incoming Secretary of State will bear in mind. First, as others have alluded to, we have a pilot going on and a system of grades that is out there. I fully understand that that is under way and there are enormous lessons to be learned from it. However, I hope very much that, after the election, whoever the Government may be will think hard about how they use that information, how they publish it, and whether they are in any sense obliged to come forward with the type of single-rank national league table that has caused so much anxiety to students. That is of great concern and it is hard to see how it serves the purpose, also expressed in the current Conservative manifesto, of preserving the reputation of our great university sector.

The other thing, on which I do not have any particular inspiration but about which I would love the incoming Government to think, is how to widen out their contacts with not just the organised sector and Universities UK but the academics and students who are really what the sector is about. We have great universities not because we have activist managerial vice-chancellors but because they are autonomous in large measure internally as well as vis-à-vis the state. That has been of real concern to me. Since we are going to have an Office for Students, it would be very good if, post the election, we could make it genuinely an office for students.

[Lord Stevenson of Balmacara (Lab)]

My Lords, this is a very big Bill. I share the feeling of the noble Lord, Lord Kerslake, that perhaps this subject is one we will not see again for some time to come and so ought to enjoy what we are seeing now. The train passes slowly, but it is a very important one and we should pay regard to it.

We should also bear in mind that the Bill attracted more than 700 amendments and resulted in, at our last count this morning, 31 major concessions made by the Government to the voices raised, in the other place and particularly in here, in relation to some of the issues we heard about today. The noble Baroness, Lady Deech, was right to reflect on the fact that what we have in front of us today, although really important, is the end of the process, not the whole of it. We should not forget that within the list of concessions—“concessions” gives the wrong sense; I mean the things that moved in the Bill—there are important aspects. There is not just freedom of speech, which she mentioned and which is of course tremendously important, but also measures that will improve collaboration within the sector, that will help reverse the decline in part-time students, that will assist mature students who wish to come back, and that pave the way for more work to be done on credit transfer and flexible courses. These are all really important changes to the infrastructure of our higher education system and will make it better. They have not been picked up today because they were dealt with earlier in the process, but they should not be forgotten as they are important.

We have also heard nothing today about UKRI and the developments made in that whole area, which are to change radically the consensus on operating within science and research more generally that has gone on for nearly 30 years in one form or another. It is important that we also reflect that those changes went through after debate and discussion—and some minor adjustments but not many—primarily because there was an effort to make sure that the words used to describe the change were understood properly. A lot of time was spent in going round talking to people and making sure they were happy with that. That was a good thing. Indeed, this whole process, as has been touched on already by a number of noble Lords, is an example of what this House is good at but should be more widely developed within our political debates and discussions: that there is room for civilised debate and discussion about every issue. It does not have to be party political, as my noble friend Lord Blunkett said. It can be small-p political. It can be aimed at trying to arrive at a better overall solution, and I am sure that what we are achieving today has ticked the box in all these areas.

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[Lord Mackay of Clashfern (Con)]

My Lords, the amendment in this Motion regarding the appeals system is greatly improved, as my noble and learned friend Lord Judge has said. I am delighted that this has happened because it is of vital importance in relation to the very serious matters that the Office for Students has the power to deal with. I thank the Ministers who have been involved. I include in this particular thanks to my noble friend Lord Young of Cookham, for reasons that I shall explain in a moment, and the Minister in the Commons for the very kind way in which various reactions of mine to this extremely important Bill have been handled.

I want to mention a particular matter that does not arise especially under this Motion but, from my point of view, is rather important. When the noble Baroness, Lady Brown, raised the issue of the new power to search the headquarters of higher education providers, she indicated that it was something that the higher education providers anticipated with a degree of apprehension. In response to that, my noble friend Lord Younger of Leckie read out from Schedule 5 the statutory requirements before such a warrant could be granted. I have listened to a lot of the Bill without particularly talking myself, but on that occasion it occurred to me that one of the assurances the academic community was entitled to get was that those restrictions, which are quite powerful and important, would definitely be the subject of consideration by the magistrate. I suggested that the magistrate should sign a document to that effect. I got a letter almost immediately, which is still on the website, to say that such a thing was unheard of.

It is 20 years since I handed over with confidence my responsibilities for this part of what is now the Ministry of Justice to my successor, the noble and learned Lord, Lord Irvine of Lairg, so it is a very long time since I dealt with this particular matter directly. Still, when I got that response, I thought, “Well, in that case the thing to do is to alter the words of the warrant to make it clear that the warrant’s signature carries that with it”. That was objected to for all sorts of reasons, as your Lordships may remember, and some of them were addressed by my noble friend Lord Young of Cookham on Report. I felt rather strongly about it, as he recognised, and he kindly said the Government would consider it further before Report, giving me an opportunity, which otherwise I would not have had, to raise the matter on Report.

I was still very insistent on this, because I could not see any objection to it. I am particularly obliged to the Minister in the Commons, Mr Johnson, for arranging at the last minute for me to have a chance to deal directly with the Ministry of Justice, from which the objections to my amendments were coming. That afternoon, I was able to meet the official in that part of the Ministry of Justice for which, as I said, long ago I had responsibility. He eventually told me that in fact, the procedure for dealing with warrants had now been altered by order of the Lord Chief Justice, particularly in criminal cases so that, at the end of the application for the warrant—strangely enough—there is a place for the magistrate to indicate whether he or she agrees that the warrant should be granted and, if so, what the reasons are for that decision. He said that he thought that this was probably general practice in relation to warrants in the magistrates’ court—because this is not a criminal warrant under the Bill. My noble friend Lord Younger of Leckie said that that was the position when the Motion was moved on Third Reading.

I therefore express my gratitude to the Minister and the Bill team from the Department for Education for their kind treatment of me in connection with this and other matters. It is important that where a Ministry other than that directly responsible for a Bill gives advice to block an amendment from someone who, after all, was thought of as a government supporter, it should be blocked in a way that depends on Ministers’ expertise. With respect to Mr Johnson’s great variety of eminence, he would not be particularly interested in the magistrates’ courts procedure for warrants, so it is really nothing to do with him. Similarly, for my noble friends Lord Young of Cookham and Lord Younger of Leckie, it is a damaging way of damaging your colleagues without much apparent responsibility. I therefore qualify my thanks for the work that has been done behind the scenes here, modified by that matter, for which the Ministers responsible for the Bill have the right for me to make it clear that it was nothing to do with them; it was from a source for which they have only the responsibility of being in the one Government.

[Lord Stevenson of Balmacara]

My Lords, I was not going to intervene on this point because the case for accepting the amendments in lieu has been made very strongly by both the noble and learned Lord, Lord Judge, and my noble friend Lady Royall, but that little vignette from the noble and learned Lord, Lord Mackay, put me in mind of two things that I thought it might be useful to share with the House. First, the noble Lord, Lord Lisvane, has been very active on the Bill on a particular narrow issue. As a result, I have got to know him a bit better. He kindly shared with me a speech that he gave recently at a meeting of a rather arcane group of people who seem to be interested in administrative law—the noble and learned Lord probably goes to their meetings every week, but it is the first time I had ever heard of it. They obviously debate serious and important issues. His address was about the quality of legislation going through your Lordships’ House. I recommend it to all noble Lords who been involved in this process, because I observe a little of what the noble and learned Lord described. When the annals of this Parliament are written up, I hope that there will be space for this little vignette of persistence over every other aspect of life, which has resulted in a terrific result. He did not quite give the nuance that I thought that he was going to end up with—and I wanted to share that with the House. There were not many of us there late at night at Third Reading when this matter was finally resolved, but it is worth bearing in mind.

The noble Lord, Lord Lisvane, makes the point that, very often in considering legislation, a mentality sets in in the Bill team that is called the “tyranny of the Bill”—an article of faith that the Bill must be right, because the people who have put it together have spent most of their professional lives working on this piece of legislation. In the case of higher education, they have probably waited a generation to get a higher education Bill together. They are not going to give up a comma, let alone a word or a phrase, without considerable resistance. He praised avidly legislators in both Houses getting round that. I mention that point only because, as we have found a lot of times, the results that we are seeing today were not always there; it did not always feel as if we were working in a spirit of co-operation, trying to get the best legislation. Perhaps I should not have said it, but I meant it at the time. It certainly did not feel like that on day 1 in Committee, when there was every opportunity to compromise on a particular issue and the Minister, when offered the chance to take away an issue and look at it again, spent about three-quarters of an hour, it seemed to me, finding every conceivable reason for saying no. I do not think that that was to the benefit of the Bill in the long run—but we have got over that.

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[Lord Storey (LD)]

My Lords, we agree on these Benches that as a result of the work that has been done we have a much better regulatory framework. Rigorous tests for degree-awarding powers are important. I was very much taken with the Minister’s comment that there should be no lowering of quality in protecting the value of university degrees. There are private providers, and the majority of private colleges do a fantastic job, but let us not kid ourselves: there are still some private colleges—and I would use the term “bogus colleges”—that with these new powers and regulations will not carry on letting down the quality of our university degrees and will not let down university students. It cannot be right, for example, that a student is enrolled to do a degree course that is validated by one of our universities but for which the only requirement is one GCSE. That cannot be right in our higher education system. These new powers will, as a result of what the Minister said, ensure that we can be proud of all our private providers.

[Lord Stevenson of Balmacara]

My Lords, I echo much of what has been said already, particularly by the noble Baroness, Lady Wolf, who has been a stalwart in fighting this corner. We have supported her all the way on it and I am very glad that we have reached the point where I think we are all happy with where we have got to.

The main focus of the amendments that were laid in Committee and on Report, and those that have been now been presented in lieu by the Government, are about the ongoing arrangements in universities and higher-education providers in order to provide degree-level qualifications. The particularly narrow issue of what happens when an existing provider is taken over, whether by merger, purchase or otherwise, still needs a bit of care and concern, because there is fear within the sector that this might well become a feature, perhaps an unwelcome feature, of what we are doing. We are not against new institutions; we have always said that we will support those, but we want them to be proper institutions that are properly validated, with good procedures and processes in place. We would welcome that. However, where there may be a commercial imperative rather than an academic imperative to acquire a body, could the Minister comment on what he anticipates the arrangement will be should that merger or takeover be in play?

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[Lord Mackay of Clashfern]

My Lords, in relation to what the noble Lord, Lord Bilimoria, said about the Prime Minister’s remarks on calling the election, I am relying only on my memory but I do not think that she said “the unelected House of Lords”. She referred to unelected Lords who had made it clear that everything they could do to stop Brexit would be done—it was something like that. I do not think that she was referring to the House of Lords as a whole, because apart from anything else it would not fit the description.

I also support what my noble friend Lord Willetts said. He knows much more about the atmosphere in Whitehall now than I do, and he said he hoped that the research promoted in this might well have a good effect in that direction.

Finally, I agree with what has been said about the noble Lord, Lord Stevenson of Balmacara. I hope that he will enjoy the freedom of not being on the Front Bench. I want to thank all his colleagues on the Front Bench and those on the Front Bench of the liberal party and on the Cross Benches for their help with some of my efforts. I have enjoyed their co-operation and for that I am very grateful.

[Lord Stevenson of Balmacara]

My Lords, the Prime Minister referred to us all as saboteurs more than anything else, which might be a compliment in some ways. We might reflect on that as we go forward.

We must accept that we have made no progress at all on this section of the Bill. It would probably be wrong of me to give too much detail about what happens in a wash-up session. Very few people are privileged to attend them, and I was there only for a small part of it. The rest of the time I was left hanging on a mobile phone in a remote area in which it did not work very well, and I got more and more frustrated about my inability to have any influence in some of the debates. However, one would have hoped that a majority of 94, and the arguments that we have heard rehearsed again today, would have led at least to a discussion about the way forward on this complex and rather annoying area that we seem unable to bring into focus.

In fact, I understand that it was made clear at the very start that the Minister concerned was unable to discuss any concessions in this area: it was ruled off the table from the beginning. In that sense, it plays a little into the conversation that we had earlier: that there is something dysfunctional about Whitehall on cross-cutting issues. We all know the wicket issues that are difficult and that nobody wants to play on. No Minister will take full responsibility for them and unless they get prime ministerial push—and a lot more besides, because Prime Ministers are not always as powerful as public misconceptions would have it—they will not make the progress necessary to achieve something that is genuinely about the whole of government. A hole has been created in this area and we have, I am afraid, fallen into it. Added to that is what appears to be an uncanny ability of the current Prime Minister to exercise control in a fairly remote part of the Government.

I have two other things to say before we hear from the Minister as he winds this Bill up. The first concerns a little of what the noble Lord, Lord Willetts, said and what was said around the House. We need to use the fact that we have been rebuffed again on this issue to try to get the case right. That would be a good thing to do. Although the statistics are important, I will focus not just on them, because it might be a little ambitious to think that we will get a counting-in and counting-out method just because there is a problem in this area. The real issue is: who actually controls the entry of students to our universities? The noble Lord, Lord Willetts, said that at the end of the Bill we would probably have the best-regulated sector in the UK and possibly in the world. But should we not be trusting our higher education institutions to get on with the job and to recruit the best people they think can benefit from an education here?

The truth is that this is all second-guessed by the Home Office, which has its own teams of people who interview the students nominated by the institutions. They set the quota levels, which are said to be unlimited but are in practice set and increased only on application, and they change the quotas available to every institution if they feel that an institution is making mistakes in the people it recruits. This is not just about the point of entry. What happens to these students after they have left the responsibility of the institutions? When they go out into the wider world if they are able to get a job, or even if they disappear from the statistics, somehow the original institution that brought them in is responsible for them. That seems a double penalty, both for what they are doing and for future recruitment issues. All this has to be picked up and looked at. It is not a good system.

A pilot scheme is ongoing that affects masters courses, not undergraduate courses—deliberately chosen so that the results will be available earlier. Therefore, there is some hope that we might use that system to drive through a different approach to this, so that trusted institutions that are well regulated under a new system that has the support of both Houses can make the decisions necessary to recruit the right students. Those students will benefit from our system and can then fulfil their soft power responsibilities, duties and activities before going back, creating economic activity before they do so and being good citizens here and in the world. Currently, we have failed completely. I really regret that. I have bitterness and regret as much as the noble Lord, Lord Hannay, and I share his pain, but we must move on from here. The issue must not go away; it is too important for the economic future of our country, for the institutions concerned which need these students if they are to be successful and make progress, and for the individuals who are getting the benefit of the education here. I hope we will make progress urgently on the disaster that we now face.

Higher Education: Loans

Lord Stevenson of Balmacara Excerpts

Wednesday 5th April 2017 Lords Chamber

Moved by

[Lord Stevenson of Balmacara]

That this House regrets that the Higher Education (Basic Amount) (England) Regulations 2016 and the Higher Education (Higher Amount) (England) Regulations 2016 together with retrospectively changed loan conditions for existing students are further incremental burdens on students that risk worsening the opportunities for young people from low-income backgrounds, mature students and those undertaking part-time courses; and calls on Her Majesty’s Government to report annually to Parliament on the impact on the economy of the increasing quantum of graduate debt, estimates of payback rates, and the estimate of the annual cost to the Exchequer of the present system.

Relevant document: 21st Report from the Secondary Legislation Scrutiny Committee

[Lord Stevenson of Balmacara (Lab)]

My Lords, I declare a previous interest in that some time ago I worked in what is now Edinburgh Napier University. My wife is a governor of a university in London and I have two children, believe it or not, currently studying at British universities and one who graduated two years ago.

The Higher Education (Basic Amount) (England) Regulations 2016 and the Higher Education (Higher Amount) (England) Regulations 2016 set variable limits on the maximum fees that publicly funded English higher education institutions can charge students. They are negative instruments and the time for praying against them has long passed. However, in its 21st report, the Secondary Legislation Scrutiny Committee drew these instruments to the special attention of the House,

“on the ground that they give rise to issues of public policy likely to be of interest to the House”.

I am taking up that challenge. Despite the fact that we spent something like four months looking at the Higher Education and Research Bill, I still hope to engage the interests of Members of your Lordships’ House.

I am going to argue that the neoliberal marketisation of our higher education system is wrong in principle, because higher education is not a market; that it loads students with personal debt; that it will not improve opportunities to study for young people from disadvantaged and low-income backgrounds, mature students and those who wish to undertake part-time courses; and that linking fee rises, thereby increasing the personal debt of students, to only one of the attributes of a good university is a mistake. I will end by arguing that the cost of these polices to the public purse is now so complex and uncertain that it is virtually impossible to challenge what the Government are doing: we need more and more regular information and I call on the Government to provide it.

I went to university in the 1960s: my fees were paid by the state and I received a full maintenance grant. I would not, and indeed could not, have gone to university without that support, and I am sure my life would have been very different had I not had those chances. Education has been, and always will be, an important ladder out of social disadvantage.

In the period since 2012, our higher education system has been transformed. The tripling of fees, the introduction of income-contingent tax liabilities—loans in common parlance—and the ending of maintenance grants were described as market-driven, aimed at putting students at the heart of the system. According to classical economic theory, those 2012 reforms, with their direct grant payments to institutions, and fixed undergraduate recruitment caps replaced by a voucher system financed by loans, should have improved student choice as the money followed the applicant. Good institutions would expand to meet demand and those that struggled to recruit would have to either up their game or exit the market.

But have these reforms actually achieved what they set out to do, and has it been for the good? According to the IFS think tank, we have students leaving university with personal debts of around £53,000 for a three-year course. A large majority will not repay their loans in full. We have the most expensive courses in the world, and there has been a complete collapse in part-time provision, mature students have all but disappeared, and there is a dearth of home-based postgraduate students.

Even if the reformers of 2012 were right to bring competition into the sector, it was hardly a resounding success. First, all institutions gravitated to the highest possible fee—then £9,000. Those that did not were regarded as inferior, so that in truth all that was created was a monopsony: a rigged market where prices are set by producers. Secondly, the undergraduate tuition fee is not a price. As 90% of eligible students take out a loan to fully cover tuition fees, the cost of the degree is actually determined by the loan repayments made, not the amount borrowed, and this can vary widely. Somebody who never earns more than the repayment threshold pays nothing, and very high earners have to repay it all. The price signal is determined primarily by future income, not graduating debt. It is smoke and mirrors. That is why the expert commentator in this policy area, Andrew McGettigan, argues that,

“the tuition fee cannot signal as a price should in a perfectly competitive market”.

At this point, in my view, Ministers should surely have given up the experiment in neoliberalism. Instead, they have decided—and brought forward in the current Bill—that what was missing from the 2012 reforms was better information and a thorough shake-up of the system by stimulating an influx of challenger institutions. One cannot argue against changes that improve information, but it has to be high-quality. The current proposal for a teaching excellence framework to provide the market with a proxy indication of teaching excellence in each HE provider is, to my mind, hopelessly flawed.

There is widespread agreement on the need to ensure teaching of the highest quality in our higher education system. Indeed, students paying £9,000 or more a year are surely entitled to expect a consistently high quality of teaching, wherever they undertake their degree. But there are, I suggest, four main practical reasons why the Government’s present approach is wrong.

First, the TEF is not ready. There is not yet a settled methodology, no agreement on the metrics to be used, and no agreement on the balance between the metrics and provider submissions. We are clearly some way off where we need to be on even the basic wiring. Secondly, currently the TEF rating will relate to the university and not to the subject or course. We will not see subject-level ratings until 2020, and even that may be an ambitious target. Thirdly, the customers who are supposed to be benefiting from this behemoth—the students—are vehemently against the proposal. Fourthly, universities are not just teaching machines, and linking fee rises to a faux framework which does not even address teaching in the classroom is to diminish the regard we should have also to scholarship and research excellence, engagement with wider society, and the dissemination and application of knowledge. A good university should be judged across all its missions.

However, there are also principled reasons why the current TEF proposals should be abandoned. As the noble Lord, Lord Sutherland, who created Ofsted, said at Second Reading of the Higher Education and Research Bill, it is simply not possible to devise a robust and sustainable scheme of evaluating teaching excellence if it does not start in the lecture theatre or classroom. Any scheme that relies on second-order metrics is simply not fit for purpose. Any scheme to measure teaching excellence, particularly if it is to operate at course or class level, surely has to be based wholly or mainly on the systems already in place in higher education providers which ensure that the courses offered are taught to a high standard. Most current HE providers of high standing already have such systems in place. Why duplicate them?

Surely the better way is to build trust and co-operation with the institutions themselves to get this right, subject only to a proportionate and risk-based assessment procedure. Assessing that good-quality teaching exists is one thing, but a system of rating universities gold, silver or bronze with the flawed TEF will jeopardise the excellent international reputation of British higher education, which does so much to attract overseas students and extend British influence and soft power abroad. Why rush to introduce an untested system, which will create the impression that some universities are failing when they are not?

We must not forget that there is a huge downside at a personal level. Students who get a bad deal from a course or institution have very limited abilities at present to revisit their choices. They even seem to have their own initiatives penalised by the current system, which does not support transfers or credit accumulation —although I hope that that will change. In any case, caveat emptor is surely not the responsible policy for higher education, which is still the main ladder for those striving to escape from social disadvantage. I conclude that these latest market reform measures will not provide the sustainable HE sector that this country will need in the medium term, let alone in the long run.

The SIs before us change the system of inflationary fee increases, which have been in place since 2004, to one which ties the fee level that may be charged to an assessment of teaching excellence in the sector. According to the Secondary Legislation Scrutiny Committee, the department’s assessment is that the potential increase in fees will not be significant enough to alter participation decisions by prospective students. However, at the same time as laying these regulations, the DfE published an equality analysis covering detailed changes to maximum fee caps for 2017-18 and their impact on protected and disadvantaged groups of students. It is a good report. In its EA, the DfE accepts that one impact will be an increase in student loan debts. However, it also accepts that the current evidence suggests that students from ethnic minorities, less advantaged backgrounds and mature students are more debt averse and cost sensitive than the others. But are these not the very groups that we want to attract?

The committee rightly asked the DfE to comment on this astonishing admission. The department’s response includes a statement acknowledging that there is still much to do. It says that,

“Young people from disadvantaged backgrounds are still much less likely to go to university than their more affluent peers”.


Am I alone in finding that comment deeply troubling?

Where are the policies to reinvigorate part-time provision? The collapse in enrolments at Birkbeck, University of London and the Open University coincided with the hike in course fees and the introduction of maintenance loans. No real change in approach is signalled in the higher education Bill or in the Technical and Further Education Bill, which passed through this House yesterday. There are plenty of good ideas out there. It is a pity that suggestions such as have been made for a specialist advice and admissions service for lifelong learning courses, similar to UCAS, the creation of a community learning centre in every major city and the reintroduction of individual learning accounts to support flexible learning throughout life have not been given more consideration in either of those Bills. So we have a policy approach which will not work: a system of fee increases, and thereby personal borrowing increases, which will not enhance social mobility or improve part-time provision.

What about the impact on students themselves? In Budget 2015, the Government confirmed that they would freeze the loan repayment threshold for five years and lower the official financial reporting discount rate for loans from RPI plus 2.2% to RPI plus 0.7%. Those of your Lordships who are not numerate in economics or in the detailed and sophisticated analysis of interest rates may wish to drift out for the next few minutes because this is quite technical—I did not say leave, as noble Lords would miss what might be my last speech from the Front Bench, which would be terribly upsetting. I play all the plugs when I need the support.

On the question of abolishing maintenance grants, the IFS said:

“The poorest 40% of students going to university in England will now graduate with debts of up to £53,000 from a three-year course”,


which is up from £40,500. It also points out that high earners coming from poorer backgrounds will now repay for longer,

“with the average individual contributing an extra £9,000 towards the cost of their degree”,

in net present value terms. The IFS concluded that freezing the repayment threshold for five years means that graduates would see their repayments increase by £3,800, on average, and that a median lifetime earner would see an increase in repayments of £6,000. For those who started between 2012 and 2015, this represents a sizeable retrospective price hike on what they were promised before signing up to their loan agreement. That is bad enough but, as the IFS points out, compared to the 2012 reforms the 2015 measures are regressive. They affect those coming from the poorest backgrounds adversely and affect median earners the hardest.

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[Viscount Younger of Leckie (Con)]

My Lords, I start by thanking the noble Lord, Lord Stevenson, for tabling this Motion. Before I respond, I shall, if I may, take the opportunity to say a few words about the noble Lord. The House now knows from remarks he made towards the end of Third Reading of the Higher Education and Research Bill last night that he is stepping down from his current spell of active Front- Bench responsibilities. This is certainly a surprise to me, and I am genuinely very sorry to hear it.

I have engaged with the noble Lord fairly intensively on a number of Bills in this House over several years, as he will know, as have some of my colleagues. It is fair to say that we usually know where we stand with him. He can be direct; he sometimes tells it as is, which he should certainly take as a compliment. He also looks to be helpful and constructive—while emphasising his party’s perspective, of course. Above all, I will miss his humour, sometimes cryptic, often sharp and always quick. My colleagues on these Benches have great respect for him and regard him as a bit of a magician—a member of the Magic Circle, perhaps—for his ability to juggle several Bills at the same time with relatively little support, although I am sure it is quality support. He will not be leaving the Front Bench entirely, I understand, but we all wish him well for the future.

These words have nothing at all to do with me trying to warm the seat for the noble Lord as I move on to respond to the concerns he has raised this afternoon. We take pride in the fact that Britain has some of the best universities in the world. To make sure that this continues, it is important that we put universities on a strong, sustainable financial footing. Indeed, Andreas Schleicher of the OECD said in September 2016 that,

“the UK had been able to meet rising demand for tertiary education with more resources … by finding effective ways to share the costs and benefits”.

However, the £9,000 fee cap that was set in 2012 is now worth £8,500 in real terms. If we leave it unchanged, it will be worth £8,000 by the end of this Parliament. As my noble friend Lord Willetts alluded to, the Labour Government under Prime Minister Tony Blair sensibly put in place new legal powers in 2004 which allow Governments to maintain university fees in line with inflation through a negative procedure. Rather than increasing the fees for everyone, we are allowing only high-quality providers to increase their fees in line with inflation. Universities UK and GuildHE, the two main representative bodies that collectively represent more than 170 higher education providers in England, Wales, Scotland and Northern Ireland, have made it clear that allowing the value of fees to be maintained in real terms is essential if our providers are to continue to deliver high-quality teaching.

The importance of this was expressed by Gordon McKenzie the CEO of GuildHE when he wrote that,

“fees had to rise by inflation at some point and it was fairer for students if those rises were linked to an assessment of quality.”

The vote on Report of the Higher Education and Research Bill was obviously disappointing. However, I remind noble Lords that the parliamentary process is still ongoing, and I look forward to Peers’ further engagement on this matter. Our policy intention remains to link maximum fees to the quality of provision via the teaching excellence framework as part of our wider reform package, as we are doing through these regulations. It is counter to government policy to see fee caps rise under any other circumstances.

As I mentioned, the fee link has been strongly supported by sector organisations GuildHE, as well as Universities UK, which said,

“allowing the value of the fee to be maintained in real terms is essential to allow universities to continue to deliver a high-quality teaching and learning experience for students”.

The noble Lord, Lord Stevenson, stated that the TEF was not ready and that we needed to move to the subject-level TEF. His opposition to TEF flies in the face of the support given to it by the sector bodies—and I have just added a few quotes to support that. It is absolutely our intention to move to subject-level assessment, but carefully, after two years of rigorous pilots.

I refer to the points raised in the Motion about the importance of ensuring access to university for everyone. Through universities being sustainably financed, we have been able to lift the student number cap, meaning that more people than ever before have been able to benefit from a university education, as my noble friend Lord Willetts said. Many people said, when fees were increased to £9,000, that it would dissuade people from disadvantaged backgrounds, but the opposite has happened. For this academic year, 2016-17, the entry rate for 18 year-olds from disadvantaged backgrounds is at a record high—namely, 19.5% in 2016, compared with 13.6% in 2009. So far, that has continued into 2017, with record applications for the 15 January deadline. Disadvantaged young people are now 43% more likely to go to university than in 2009, or 74% more likely to go to university than in 2006. In addition, those who go to university have more funding available to them. By replacing maintenance grants with loans, we have been able to increase the funding for living costs that some of the most disadvantaged students receive. It is an increase of over 10% in the current academic year, with a further 2.8% increase for 2017-18.

The noble Baroness, Lady Garden, stated that there were too few BME students, and of course we would always want more. However, we have record numbers of black and minority ethnic students going into higher education, and we want to go further still. We are legislating for greater transparency that will provide unprecedented access to anonymised applicant data on gender, ethnicity and socioeconomic background, as I think she is aware.

Universities, too, are spending even more to help those from disadvantaged backgrounds to access higher education. In 2017-18, institutions are expected to spend over £800 million on measures to improve the access and success of disadvantaged students, which is more than double what was spent in 2009-10 and can continue to increase if fees are allowed to keep pace with inflation. The Government’s policy will further build on this success, as stated by Les Ebdon, the director of the Office for Fair Access who said that,

“TEF will ensure that higher education providers have to carefully consider about how to provide excellent teaching for all their students, whatever their background”.

On the repayment of loans, I wish to assure noble Lords that our repayments system offers a fair deal to students. The current student loan system is heavily subsidised by the taxpayer and universally accessible to all eligible students, regardless of their financial circumstances. While the Motion in front of us states that the Government retrospectively change the terms of loans, I would remind the House that nothing in fact has changed. Our repayments system is based on income and not the amount borrowed. Again, my noble friend Lord Willetts alluded to that issue. Graduates with post-2012 undergraduate loans pay back only when they are earning more than £21,000, and then only 9% of earnings above that threshold. After 30 years, any outstanding debt will be written off, with no detriment to the borrower. That is entirely different to a commercial loan. The maximum fee cap is rising only by inflation, so it will not increase in real terms for anyone going to university.

We believe that it is right for those who benefit most from higher education to contribute to the costs. We should not forget that higher education leads to a better chance of being employed compared to those holding two or more A-levels, and an average net lifetime earnings premium that is comfortably over £100,000.

The noble Lord, Lord Stevenson, asked about reporting to Parliament on student loans, which is a fair question. I reassure the House that the debt repayments and costs associated with the present system of student loans are already reported annually to Parliament in the Department for Education’s annual report and accounts, the next set of which is due to be published this summer. In addition, student loans also feature regularly in the economic and fiscal outlook publications from the OBR, which are laid in Parliament twice a year.

Finally, I reassure your Lordships that the fee increase under these regulations is open only to those institutions who meet high quality standards. For this year this meant that they passed a quality review carried out by highly respected bodies such as the QAA, and those that wanted to charge the highest fees will need an access agreement.

As the TEF is fully implemented, the assessment process that universities will have to meet to be judged as good enough to raise their fees in line with inflation will become even more rigorous and more robust. The TEF will provide strong reputational and financial incentives to prioritise the student learning experience. We are linking funding to quality of provision, not just quantity of students, and ensuring that providers demonstrate high-quality teaching if they wish to maintain their fees by inflation.

The TEF has been strongly supported by organisations such as OFFA and the Sutton Trust, bodies whose fundamental purpose is to support the life chances of those from disadvantaged backgrounds. The Sutton Trust, for example, has said that,

“we need to shake the university sector out of its complacency and open it up to a transparency that has been alien to them for far too long. It is good that they are judged on impact in the research excellence framework, and that the teaching excellence framework will force them to think more about how they impart knowledge to those paying them £9000 a year in fees”.

Ensuring that people from all backgrounds are able to go to university is an essential part of the Government’s ambition to support all people to realise their potential, whether they are young or mature students and whether they study full or part time. The increases to maximum fee caps set out in these regulations are critical to achieving that objective. They ensure that our university sector has a sustainable financial footing so that it remains world class. I remind noble Lords that we are allowing fee caps only to keep pace with inflation—and in real terms they will be less than in 2012. Equally, we remain firm that these fee increases should not be automatically given but awarded to those that provide high-quality teaching and value for money to students.

I will answer some points on student funding made by the noble Lords, Lord Stevenson and Lord Bew. We believe our student funding system is fair and sustainable. The resource accounting and budgeting charge is not an unintended loss nor a waste of public money. It is the policy subsidy required to make higher education widely available, achieving the Government’s objectives of increasing the skills in the economy and ensuring access to university for all. After I answered an Oral Question from my noble friend Lord Flight the other day, I wrote quite a lengthy reply to him on this matter, and I am more than happy to put a copy of that letter in the Library if it is not already there.

The Government’s policies increase the number of people who are able to benefit from university education, resulting in record numbers of young people from disadvantaged backgrounds applying to university. Those opposing the increase in fees in line with inflation have not explained how they will find the £16 billion of which they will be depriving our universities over the next decade, risking universities’ financial sustainability and depriving universities of the funding they need to provide a high-quality education.

Therefore, in the light of my remarks, I hope that the noble Lord, Lord Stevenson, will consider withdrawing his Motion.

[Lord Stevenson of Balmacara]

My Lords, I thank noble Lords very much indeed for their comments, particularly about me. I am a deeply private person, and I hate it when the spotlight suddenly swings round and catches you like a rabbit—which I am here today. I did not want that or expect it, and I certainly did not want it to spoil the debate. I hope it has not, because the contributions have been on a serious level, and I thank the Minister in particular for dealing with the issues as they were presented.

The question of personality in this House is interesting. When you first come into the House, the thing that is impressed most on you is how it has to be treated as a third person in a passive sense—namely, as your Lordships’ House. You never speak about individuals. You certainly do not use first names. So the sudden emergence of an individual who has something to say is really rather shocking, and I hope that it does not get repeated—certainly not to me.

We have had a good debate. I have now realised, after nearly seven years here, that the way to tackle these issues is by tabling this sort of Motion because in the normal cut and thrust of debate and in the discussion of legislation and questions, one can never get down to a serious debate about serious issues. Therefore, I agree with the noble Lord, Lord Willetts, that a Motion such as this is a good thing to have now and again—not all the time, but just occasionally—to enable us to have a detailed discussion of issues causing concern. I fully accept what the noble Lord, Lord Bew, said—some of these issues are rather worrying.

The Minister said in his conclusion that he thought we had a fair and sustainable student finance system. It may or may not be fair—I am reminded of Zhou Enlai who, when asked about the impact of the French Revolution, said that it was too soon to say—and we will not know that for 30 years until we look back at the system when it has ended. However, we cannot wait that long. Therefore, the suspicion is that it is not fair. Is it sustainable? We cannot tell that because the figures are very difficult to interpret. The noble Lord, Lord Willetts, with several brains working full time, has not been able to crack it all and will be able to give us lectures and seminars to end all seminars. I look forward to those. However, I cannot cope with that. I just want something simple. If we cannot interpret this system on the basis of the DfE’s published accounts, perhaps tabling another Motion at an appropriate time agreed with the Minister, because he is a friend as well, would be the way forward. However, in the interim, we should get things started by testing the opinion of the House on whether it would like to see more information on this interesting area.

Higher Education and Research Bill

Lord Stevenson of Balmacara Excerpts

3rd reading (Hansard): House of Lords
Tuesday 4th April 2017 Lords Chamber

[Lord Wallace of Tankerness (LD)]

My Lords, this issue was raised in Committee and on Report and concerns the characteristics which the Office for Students can require of universities seeking registration as higher education providers. On Report I narrowed it down in exchanges with the Minister, saying that we would be prepared to consider solely the question of age, and he agreed that he would look at it. I regret that the Government did not come forward with their own amendments, so I have tabled this one. It is a very short amendment, as will be obvious.

As I have indicated, the importance of this clause is that it will ensure transparency. I acknowledge what the Government have done in the course of the Bill. They have added degree outcomes to the information that is required which will complete, as it were, the student life cycle. The Bill specifies that the information should cover gender, ethnicity and socioeconomic background; this amendment would add age to that list. The reason I have narrowed it down so much is that concerns were expressed on previous occasions that some of the other characteristics, specifically those covered by the Equality Act 2010, involve to a greater or lesser extent an element of self-identification. I do not think that age could be described in that way, given that it is absolutely objective by reference to one’s date of birth.

The amendment might be small but it makes an important point. Throughout the debates on this Bill and indeed in other spheres, many noble Lords have stressed the importance of trying to do something to revitalise part-time education. The inclusion of a description of age would give us at least one tool to evaluate the progress that is being made in promoting part-time education. It is estimated that most initial entrants into part-time education are aged between 31 and 60, but between 2007-08 and 2014-15 there was a 60% decrease in that group coming in.

As I have indicated, there is a widespread view that we should encourage part-time education. The Open University has taken a particular interest in this amendment because of the important provision it makes for students studying courses on a part-time basis—I declare an interest as an honorary graduate of the university—and this would be a useful and important tool if it was included in the legislation.

Since our debates on Report the Minister and I have exchanged ideas and wordings, and through the toing and froing, he agreed to reflect on the matter. Of course the Government have promised a consultation by the Office for Students with regard not only to age but also to the other characteristics. Can the Minister give an indication of the likely timescale for the Office for Students to carry out this consultation because it will help universities to understand better how they will be supported in the planning and implementation of the requirements?

Quite simply, this small amendment meets the criterion of not being one of self-description. Perhaps I may also quote from the letter sent by the Minister jointly with Jo Johnson on 22 March. He refers to the duty and states:

“While the Duty itself must remain balanced and proportionate, it is clear that greater transparency on characteristics such as age is desirable to support equality of opportunity through widening participation”.


So the Government themselves think that this is desirable. The amendment does not run into some of the difficulties encountered in the earlier amendments. I am not holding my breath that the Minister will respond positively, but I shall listen to him with great care. I beg to move.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I support the noble and learned Lord, Lord Wallace of Tankerness, in his amendment. We tabled a similar amendment, although one that was slightly broader in context, both in Committee and on Report, so we have a continuing interest in this area. We have chosen not to support this amendment at this time, but I do not think that one should read anything into that—rather, I hope that discussions of which I am aware that are being conducted outside your Lordships’ House will have matured to a point where there may be some news that might bring a conclusion to this matter.

One of the main purposes of the Bill, at least as outlined in the White Paper which preceded it, is that it is intended to improve social mobility. That is an admirable aim and one which we fully support. One of the things about social mobility is that it is supported by a number of legislative arrangements, one of which is the Equality Act 2010 which brings into play a series of protected characteristics that define and encapsulate the issues around the need for social mobility in particular groups. It is important that we should have regard to this in all aspects of our public life, and it is therefore very important that new Bills which come forward should be built on that foundation. It is therefore rather surprising that the information requirements which are part of the amendment and focus on the need for transparency conditions that will be organised by the Office for Students—or as we prefer to call it, the office for higher education—do not include all the protected characteristics. It is only with considerable reluctance that the Government are prepared to concede that age is an important part of this area, and I hope that the Minister will confirm that when he comes to respond.

There are other values in having a confident sector that is able to publish information around all the protected characteristics. It will give students of all types and varieties the chance to judge whether a particular institution or institutions more generally are appropriate for them, given their protected characteristics, and of course it will be vital in terms of trying to formulate policy. For all these reasons, it is important that the Minister should reassure the noble and learned Lord, Lord Wallace of Tankerness, about his concerns around age as a matter that must be one of the transparency conditions, and of course subject to the consultation it is hoped that some direction will be given to the office for higher education, also known as the Office for Students, that it is something which should be taken into account. Perhaps the Minister can also reassure me that it is not impossible that in future years, work can be done to gather information around the protected characteristics, which will be important for all the reasons I have given.

[Baroness O’Neill of Bengarve (CB)]

My Lords, I am not against collecting information because it is always interesting, but I would regret seeking information under all the protected characteristics set out in this Bill, among other reasons because I do not think asking intending students whether they are pregnant is a good idea. Age has the advantage, as the noble and learned Lord, Lord Wallace, said, that it is quite objective; people know how old they are. However, one characteristic which is not in the list of protected characteristics is socioeconomic background. I think that it is separate from the socioeconomic one and it depends on the utility of the information for the purposes at hand. The noble and learned Lord, Lord Wallace, has made the case that it is useful because of the decline in participation rates among older students. I do not think we know the significance of that decline. It has happened in an age group of whom many more have had the opportunity to participate in higher education when they were younger, and it is in that context that I would be uncertain whether it is of tremendous informational value. I am not against the amendment but I do not believe that it will yield very much additional information.

--- Later in debate ---

[Baroness Brown of Cambridge (CB)]

My Lords, I support the amendment proposed by the noble and learned Lord, Lord Mackay. As a former vice-chancellor of a university that, early in my tenure, did not always get its returns on student numbers to HEFCE correct, and was therefore subject to some stern discussions with the team at HEFCE and some refunding of income to it, I feel that Schedule 5 sounds potentially rather threatening—and I know that that is how others in the sector feel. While I recognise that such powers would be used only in exceptional circumstances, the addition proposed by the noble and learned Lord, Lord Mackay, would help provide reassurance to the sector that the greatest care and attention to detail would be applied if and when such powers needed to be invoked.

[Lord Stevenson of Balmacara]

My Lords, it is otiose to add very much to what was a wonderful account of the ramifications that one can get into when one moves to question some of the wording in the schedules to some of our more complex Bills. As a guide, the noble and learned Lord has been a wonderful education for a higher education specialist such as me. To have gone through a higher education Bill and then to have learned something right at the very end is a touch of magic—a bit of fairy dust that will sprinkle down across all of us. All we now need is for the noble Viscount to stand up and measure up to the relatively low but still quite precise hurdle that has been set for him. He is an elegant, small chap; he has light feet; he has had a brilliant career in dealing with difficult questions that we have thrown at him across the Dispatch Box. I am sure that this is well within his capabilities. He would be strongly advised, given the rather glowering face behind him, to do it right this time.

[Viscount Younger of Leckie]

My Lords, with that introduction, how can one fail? I thank another noble and learned Lord—this time, my noble and learned friend Lord Mackay—for his helpful and astute contributions on this issue both in Committee and on Report. We are very grateful for the expertise that he brings to bear. As my noble and learned friend said, this amendment has had an interesting history and has done the rounds, but, on a serious note, let me offer my apologies if the department’s letters to him on this issue have misunderstood his area of concern.

I shall briefly reiterate why the powers to enter and inspect higher education providers, set out in Schedule 5, are needed. These powers will allow suspected breaches of registration and funding conditions which are considered by a magistrate to be, to quote directly from Schedule 5,

“sufficiently serious to justify entering premises”,

such as financial irregularity, to be tackled swiftly and effectively through the new power of entry. This will safeguard the interests of students and the taxpayer, and protect the reputation of the sector. As the NAO said in its 2014 report on alternative providers, at the moment the department has no rights of access to providers, and this affects the extent to which it can investigate.

We agree that it is vital, of course, that strong safeguards are in place to ensure that these powers are used appropriately. As set out in Schedule 5 as drafted, a magistrate would need to be satisfied that four tests were met before granting a warrant: first, that reasonable grounds existed for suspecting a breach of a condition of funding or registration; secondly, that the suspected breach was sufficiently serious to justify entering the premises; thirdly, that entry to the premises was necessary to determine whether the breach was taking place; and fourthly, that permission to enter would be refused, or else requesting entry would frustrate the purpose of entry. These criteria will ensure that the exercise of the power is appropriately limited. Further limitations are built into Schedule 5, including, first, that entry must be at a reasonable hour, and secondly, that the premises may be searched only to the extent that is reasonably required to determine whether there is or has been a breach.

I believe that the thinking of the Government and that of my noble and learned friend is very largely aligned in relation to these safeguards. I fully understand that this amendment does not seek in any way to alter the conditions which must be met for a warrant to be granted, or prevent warrants being granted where they otherwise would have been. Rather, as my noble and learned friend has set out, the amendment makes a small change to the powers so that the search warrant to enter a higher education provider must state that all the conditions for grant of the warrant specified in Schedule 5 have been met. I am grateful for my noble and learned friend’s valuable contribution and have discussed this with him outside the Chamber and reflected on this matter very carefully. As he said, he spoke with my honourable friend in the other place, Jo Johnson, on this matter today, and with officials from HM Courts and Tribunals Service. I hope that these conversations were helpful. However, the Government remain of the view that this schedule should stand as drafted, as we believe that a requirement to state that the conditions have been met would not provide an extra legal safeguard.

We agree that it is imperative that the conditions in the schedule are fully met before any warrant is granted. However, we believe that this is already the effect of the Bill as drafted, specifically paragraph 1 of Schedule 5. Furthermore, paragraph 3(1)(f) already provides that the warrant must, as far as possible, identify the funding or registration condition breach which is suspected. We understand that, in the past, magistrates may have taken an insufficiently robust approach towards scrutinising warrant applications but, as I have impressed upon my noble and learned friend, the position is markedly different now: the specifics of applications are carefully scrutinised and it is not uncommon for warrants to be refused. I should acknowledge to my noble and learned friend that there may have been a misunderstanding as to the requirement for a magistrate to certify that the statutory requirements for the issue of a search warrant have been met. I want to reassure him that a magistrate will be required to set out the reasons for their decisions in writing, and to add their signature to their reasons. I accept that this may be described as a certificate.

I want to go into a little more detail, bearing in mind the comments of my noble and learned friend. He asked whether an application under Schedule 5 is within the ambit of the criminal procedure rules. The criminal procedures apply to a magistrates’ court,

“when dealing with a criminal cause or matter”.

Although an application for a warrant under Schedule 5 can be granted only where the breach under investigation is sufficiently serious, there is no requirement that the investigation must relate to possible breaches of the criminal law. However, in the absence of any specific guidance to the contrary, it is the practice of magistrates’ courts to deal with applications for a warrant to enter premises in accordance with the CPR and the criminal practice directions and using the prescribed form of application and warrant. Magistrates’ courts do not seek to make fine distinctions as to whether an application is civil or criminal. It is the nature of the application that is important.

As I said earlier, I can confirm that a magistrate will sign a separate form which certifies that the statutory criteria are met. In addition, of course, the magistrate will sign the warrant. With that reassurance, with the extra detail that I have set out and the reasons we believe this amendment is not necessary, I respectfully ask my noble and learned friend to withdraw his amendment.

--- Later in debate ---

[Viscount Younger of Leckie]

My Lords, before the Bill does, I hope, indeed pass, I want to say a few words. At this milestone in the Bill’s passage, I, along with my colleague, the Minister in the other place, would like to take a moment—and I hope that noble Lords will indulge me as I use this term one last time—to reflect, and perhaps I should say reflect carefully, on how far it has come since being introduced to this House last November.

The Bill is the most significant piece of legislation that the higher education sector has seen in 25 years. As is fitting for such an important piece of legislation, we have heard powerful speeches from distinguished noble Lords, many of whom have held respected posts in our world-class higher education and research institutions, on key aspects of the Bill. For example, the importance of protecting institutional autonomy has been an area on which we have reached agreement. The amendments on this issue that were brought forward by noble Lords on Report, which the Government supported, were welcomed across these Benches. The Government listened carefully and responded on this issue, as we did on many others. I believe that the Bill is better as a result of this reflection. I look forward to continued discussions on the changes that the Lords is sending to the Commons, but I am truly grateful for the extensive debate, discussion and consideration of all aspects of this important piece of legislation from all sides of the House.

I express particular gratitude for the constructive engagement of numerous noble Lords. Before I forget, I want to thank my noble and learned friend Lord Mackay for his very kind words about my father. It was moving and I am very grateful. I start by thanking noble Lords opposite, particularly the noble Lords, Lord Stevenson, Lord Watson and Lord Mendelsohn, who have led the Bill from the Opposition Benches. The noble Baroness, Lady Garden, and the noble Lords, Lord Storey and Lord Addington, played a key role for the Liberal Democrats. A wealth of experience has been brought to bear from the Cross Benches: to name just a few, I thank the noble Lords, Lord Kerslake, Lord Lisvane and Lord Krebs, and the noble Baronesses, Lady Brown, Lady Wolf in particular, Lady O’Neill, who is in her place today, and Lady Deech. I also thank the right reverend Prelates the Bishops of Durham, Portsmouth and Chester. Of course, I thank my noble friends behind me: my noble and learned friend Lord Mackay, who I have mentioned already, and my noble friends Lord Lucas and Lord Selborne. Above all, I pay tribute to my noble friend Lord Willetts, who may or may not be in his place—I do not have eyes in the back of my head, I am afraid—whose higher education White Paper in 2011 paved the way for the reforms outlined in the Bill.

Finally, I thank my colleagues—my noble friends Lady Goldie, Lord Prior and Lord Young—for their admirable support throughout the passage of the Bill so far; I stress “so far” because there is a little way to go. I also thank the officials in the Department for Education and the Department for Business, Energy and Industrial Strategy, along with officials in the Home Office, the Cabinet Office and the Ministry of Justice who have supported the Bill. I particularly thank the officials in the higher education and research teams and the Bill team. Having mentioned all those departments, I think the Bill has been a great example of how departments can work together effectively. Once again, this House has demonstrated the value of the scrutiny it adds to the legislative process. While we are by no means at the end-point of the Bill, as I have said, I thank all those involved in reaching this significant milestone.

[Lord Stevenson of Balmacara]

My Lords, I gather from the Public Bill Office that the Bill may have broken all records for the number of amendments tabled during its passage. That is an indication of the interest it generated across the House, which allowed the House to play a full and important role, as just mentioned by the Minister, as we scrutinised every clause and, indeed, virtually every line.

The Minister was kind to say that he felt that the Bill had been improved in this process. Ministers do not always feel that way about Bills that have been torn to pieces and not always put back together in the form that they originally liked. He is right that there were things we could do with the Bill to make it, within the context of its overall shape and form, slightly better and more accommodating of the needs of the sector it was intending to regulate. As the Minister says, there is further to go and perhaps it will change again, but we have certainly made a lot of progress. My noble friend Lord Watson said earlier on another Bill that the work we had done here is what we do best. It is something your Lordships’ House should continue to do.

I add my thanks to those expressed by the Minister, starting with him and his colleagues—the noble Lords, Lord Young and Lord Prior, and the noble Baroness, Lady Goldie, who all contributed to various areas within the Bill—for their unfailing courtesy and willingness to meet and, of course, to write. We have the epistolary Minister in front of us, who writes letters almost as easily as he breathes. We benefited a lot from those because they were very detailed and gave us a lot of information. We also appreciate, as has been mentioned, the substantial involvement of the Minister for Universities and Science in the other place, who, unusually, is not here today but has been seen around as we have discussed the Bill.

I also thank the Bill team. They were very good at organising meetings and often anticipated what we needed. But they also produced some very helpful factsheets, which have not been mentioned but I found very useful. These were necessary, because for those not involved in higher education it was a bit difficult to get down into the detail of the Bill. The factsheets were very useful in exemplifying what was meant by the various regulatory frameworks and what the architecture would do in practice, and we found them very helpful.

My Front-Bench team was superb. I am grateful to my noble friends Lord Watson and Lord Mendelsohn, who covered large areas of the Bill and obtained many of the concessions now in it. Our legislative assistant, Molly Critchley—we have only one—was extraordinary and superb and kept us going with grids and other materials so necessary for an effective Opposition, as well as dealing with the Public Bill Office and all those amendments. We are very grateful for its work as well in that respect.

One of the greatest pleasures of the Bill has been the experience of working closely with the other groups in the House. We quickly discovered that our views on the Bill were shared by the Liberal Democrats and a substantial number of Cross-Benchers, and indeed some Members on the Government Benches. We found that by meeting regularly and sharing intelligence about what Ministers were saying in bilateral meetings, we could make better progress than perhaps would otherwise have been the case. As I approach the end of my current spell of active Front-Bench responsibilities in your Lordships’ House, the close working relationship we built up over the Bill is one of the memories I will cherish the most.

[Baroness Garden of Frognal (LD)]

My Lords, I add the thanks of the Liberal Democrat Benches to the Ministers—the noble Viscount, Lord Younger of Leckie, the noble Lords, Lord Prior of Brampton and Lord Young, and the noble Baroness, Lady Goldie—who have given such detailed contributions throughout some very tough debates on the Bill. I echo the appreciation expressed by the noble Lord, Lord Stevenson, to the Bill team for their engagement, briefings and meetings—and, indeed, their patience—in the course of the Bill.

We are most grateful that the Government have accepted and introduced so many amendments to the Bill, and we live in hope that the amendments agreed by this House will be confirmed by the Commons when the Bill returns to them. These include amendments on the issue of international students, on which the noble Lord, Lord Patten of Barnes, has a compelling article in today’s Guardian; to the teaching excellence framework; on safeguards for the quality of new providers; and on encouraging students to vote. We look forward to hearing the progress of my noble friend Lord Addington’s proposals for guidance for disabled students, and we hope that the Bill more generally will offer more opportunity to adult and part-time students.

Across the House we have all understood the need for teaching in universities to be accorded the same regard as research, but have sought ways which would encourage, rather than brand, institutions. We have seen it as imperative to maintain the worldwide respect of the UK’s higher education, while addressing any areas of shortcoming. I hope that the amended Bill will ensure that both teaching and research continue to flourish and offer learners—young, adult and, indeed, old—opportunities to develop and progress. We wish the ill-named Office for Students and the better-named UKRI every success, in the interests of the country, international collaboration and the individuals who work and achieve within our higher education sector.

I thank my noble friend Lord Storey for his tireless support and invaluable contributions on this and the Technical and Further Education Bill, and Elizabeth Plummer in our Whips’ Office, who provided us with immensely useful briefings. As the noble Lord, Lord Stevenson, said, we have certainly benefited from close co-operation with the Labour Benches and the Cross Benches, as well as those on the Government Benches who shared some of our concerns. Collaboratively, we have left the Bill much better than how it reached us. Once again, I express the thanks of these Benches for the way in which scrutiny has been conducted, and the hope that the final Bill may reflect the wide- ranging expertise and contributions of your Lordships’ House.

Technical and Further Education Bill

Lord Stevenson of Balmacara Excerpts

Report stage (Hansard): House of Lords
Monday 27th March 2017 Lords Chamber

Moved by

[Lord Stevenson of Balmacara]

10: Clause 24, page 12, line 19, leave out “(if possible)”

[Lord Stevenson of Balmacara (Lab)]

I can be very brief. I am delighted to be able to say that, because the procedures followed on the amendments have been so exemplary that I recommend them to the House and hope that they may be adopted by others in a similar situation. I raised an issue in Committee. It received a fair and interesting hearing from Ministers. I asked for and received a meeting with the Bill team at which the noble Baroness, Lady Vere, was present. We went through the issues together. There was a good dialogue and debate. We narrowed it down to two specific points, which are the subject of the amendments. On the first, Amendment 10, I think I am allowed to say that there may be some good news when the Minister comes to respond, so I shall be moving it in the hope that it will be accepted by the House.

I shall not be moving Amendments 11, 12 and 13, because in the letter that I received subsequently from the noble Baroness, Lady Vere, there is an exact response to what I was looking for—which is not, as part of the letter seems to suggest, about the impact that the current framing would have on the operation of the special education measures. The point I was trying to get at, which comes up at the end of the letter, was that in a normal insolvency arrangement, there are rules for how creditors are dealt with. I was concerned that the drafting as it stood might interfere with that. That is a narrow point and I will not rehearse it here but, at the end of the letter, the noble Baroness writes:

“I hope that I have been able to reassure you”—


she had not until then—

“that the drafting of Clause 24(4) and (5) is not intended”.

I should be grateful if, when the noble Baroness or the noble Lord responds, they repeat that so that we have it on record that it is intended that the normal rules established for ordinary insolvency will be followed and that the drafting does not intervene on that. I beg to move.

Universities: European Union Students

Lord Stevenson of Balmacara Excerpts

Wednesday 15th March 2017 Lords Chamber

[Viscount Younger of Leckie]

I have read that letter in the Times. I will certainly need to write to my noble friend on what plans there are to meet them. However, I am sure that Jo Johnson is very much aware of this.

[Lord Stevenson of Balmacara (Lab)]

My Lords, could the noble Viscount comment on the issue that has been raised, and was also raised within the question asked by my noble friend—namely, who actually runs the admissions system for universities in this country? Is it his department or is it the Home Office, given that the Home Office runs independent interviews of all persons selected in-country, imposes penalties if students who are recruited do not complete their courses and imposes quotas on the number of persons on a course? The Minister always says that there is no limit on the number of overseas students but it seems to me that the Home Office has one. Is that correct?

[Viscount Younger of Leckie]

The Department for Education takes the lead on this. However, as the noble Lord would expect, there are cross-departmental links with the Home Office, and that will continue.

Higher Education and Research Bill

Lord Stevenson of Balmacara Excerpts

Report: 2nd sitting (Hansard): House of Lords
Wednesday 8th March 2017 Lords Chamber

[Lord Willetts (Con)]

My Lords, I briefly intervene in this debate to welcome the proposals that the Government have now brought before us. There is, as we recognised in debates at earlier stages, always a balance to be struck. On the one hand is protecting the interests of students, which must be paramount, and the reputation of British higher education as a whole. On the other hand, the fact is that most of the innovation and advances in higher education in England have occurred as a result of new providers coming in and doing things differently. The history of the growth in, and success of, higher education in our country has been that doing things differently from the start is easier than changing an existing body. The arrangements in the new clause today get that balance right.

If anything, the process will now be more rigorous and defined than the kind of process that we had when decisions on degree-awarding powers and university title were taken by, among other bodies, the Privy Council on advice. This is superior to what went before. I feel a bit wary of referring to the 1960s now that the noble Baroness, Lady Wolf, has referred to them. But the fact is that one of the most exciting experiments in the growth of higher education in this country in the 1960s was when universities got their title and degree-awarding powers from the very beginning. We should not be far more restrictive than we were then.

[Lord Stevenson of Balmacara (Lab)]

My Lords, it is worth reflecting that we had quite a long discussion of this issue in Committee, when opinions were more sharply divided than they are now. Amendment 116A, which has been spoken to and which we have put our name to, was originally drafted in slightly different terms. The balancing point between the end of the first part and the second part was that the new provider would have to be established for a minimum of four years with validation arrangements and that the QAC had to be assured that the provider could meet the required standards for the long term. We are listening and reflecting on what the Government say as much, I am sure, as they listen and reflect on what we say. We have decided to change our position on this and now align ourselves with the noble Baroness, Lady Wolf, who has spoken on this amendment. We are prepared to accept that it is a good balance. I agree with the noble Lord, Lord Willetts, that we now have it about right. There is a route through which new institutions can come forward and receive degree-awarding powers: one of partnership and which has a minimum of four years. We would like to see that maintained because it has a value, but there is also the opportunity to be assessed and assured directly, without having to have a waiting period.

I am glad that, in all this debate, we have now lost the idea that there will in any sense be a probationary period; there will be no such thing as probationary degrees. We are talking about getting something up and started, which will have external value and be recognised by everyone in this country and abroad as a new institution that is of the standard required in UK higher education. We can therefore support this, which is why we are happy to sign up to the proposals in government Amendment 116. We acknowledge, although we did not sign up to them, that the new arrangements set out in the government amendments introduced by the Minister will be an effective and efficient way of carrying this forward. We support them but hope to amend the amendments that have been tabled.

The narrow point is about whether the Government’s proposals mean that new, innovative providers can come forward without what the Government allege has been a problem with trying to find validation, and the cost of that. Given that the information from the Minister’s department was that there were of the order of more than 400 new providers, of which just over 100 have degree-awarding powers already, there does not seem to be much of a problem here. We should not be too shaken into worrying about the status to which the higher education system in the UK might have fallen by having this new charge for innovation. I am a bit sceptical about that; it can be overstated. Nevertheless, I accept the general principles proposed here and we are therefore able to accept them. But the measures that are in place would be of value if the specific words in Amendment 116A, in the name of the noble Baroness, Lady Wolf, were in place. I hope very much that, when it comes to it, she will invite the House to have an opinion on that.

[Baroness O'Neill of Bengarve]

My Lords, I have nothing against new providers coming in. I should declare that I taught for 14 years at the University of Essex, which was a new provider and which I think achieved very high standards. It was of course believed not to have done so until the first research assessment exercise, which revealed that it was doing very well.

However, the deep difference that we have not yet explored in this debate is that we used to assume that new providers, like old providers, would have a system of governance of a sort that we recognise in this country. We have talked quite cosily about the governing bodies of institutions, but it is not clear to me that that is an apt way of speaking about the full range of possible providers that might come forward under this more open scheme. In effect, the burden is being transferred from governing bodies to a regulator. A regulator may say that there are certain standards of governance that it thinks are important or even that it believes that university councils should undergo some sort of fit and proper person test. That would be a reasonable thought, but that is not in the Bill at present, so when we think about new providers, we must open our minds to the full range of possibilities, and we may wish to set some restrictions on the sorts of institutions that would be appropriate. I use the euphemism deliberately.

--- Later in debate ---

[The Lord Bishop of Oxford]

My Lords, my right reverend friend the Bishop of Winchester is unable to be in his place this evening, but I bring before your Lordships his Amendment 119A. I am grateful to the Minister for the constructive discussions we have had with him and his officials, and for co-sponsoring this amendment.

One of the features of the rich diversity of higher education provision is the power exercised by the Archbishop of Canterbury to confer degrees under the Ecclesiastical Licences Act 1533. It may help your Lordships to briefly recapitulate the background to this power. Lambeth degrees, as they are often colloquially termed, are now issued in one of two distinct ways.

The first of these is following examination or thesis under the direction of the Archbishop’s Examination in Theology, usually referred to as the AET. Since 2007, the AET has been offered as an MPhil research degree with the opportunity to extend to a PhD. This provision is already registered with HEFCE, and students following these programmes have access to the Office of the Independent Adjudicator, while the standards which apply are those which accord with the requirements of the QAA.

Archbishop Justin, the most reverend Primate the Archbishop of Canterbury, places great emphasis on the rigour of the AET, and he is not alone in his belief that the course makes a valuable contribution to theological research. It enables those who may not otherwise be able to study for an English degree in any other way to do so. In particular, it opens up such opportunities to students across the Anglican Communion and makes a significant contribution to the development of further and higher education when those students return home.

The second route is the awarding of higher degrees—they are not always doctorates—in a range of disciplines to those who have served the Church in a particularly distinguished way and for whom an academic award would be particularly appropriate. Indeed, Members of your Lordships’ House have received such degrees, among them the noble Lord, Lord Sacks.

Although this is perhaps a less familiar part of the higher education landscape than some your Lordships have been considering, it is by no means merely a historical curiosity. These powers have been in active use ever since the passage of the 1533 Act and were recognised following the Education Reform Act 1988, by means of the inclusion of the Archbishop of Canterbury in the list of approved degree-awarding bodies in the relevant statutory instrument. Should your Lordships be eager for the reference, it is the Education (Recognised Bodies) Order 1988, No. 2036. These powers were left unaltered by the Further and Higher Education Act 1992.

The amendment ensures two things. First, it ensures that the Archbishop’s degree-awarding powers are appropriately safeguarded, both for those degrees conferred as a result of the submission of a thesis or the successful sitting of an examination or other form of academic assessment, and for degrees conferred on those who warrant an academic award for their scholarly or intellectual contribution to the work of the Church or to the place of faith in society. Secondly, the amendment properly brings within the new regulatory framework those awards—via the AET—which will now fall under the oversight of the Office for Students.

[Lord Stevenson of Balmacara]

My Lords, I briefly express our support, as shown by the fact that we have signed up to those amendments on revoking degree-awarding powers, introduced by the Minister. We had a good discussion of this in Committee, and it was an area of concern to many noble Lords. We had thought of tabling an amendment to try to pick up on a couple of areas that seemed unresolved. However, after discussion and reflection with both the Bill team and the Minister we were able to sign up to the group and we are therefore happy with what is now before us.

We are also pleased that the amendment in the name of the right reverend Prelate the Bishop of Winchester has been accepted by the Government. We have all had trouble when we have had to address right reverend Prelates in their place, and the idea that we also have to stumble over the words “holder of degree-awarding powers” when referring to the most reverend Primate the Archbishop of Canterbury is another thought that will make it even more difficult to engage with them in future. We are very pleased that the Archbishop has these powers and, since 1533, an unbroken record of awards of degrees that we will recognise in future through this legislative process.

There is only one question left in my mind. The Government have been very good in bringing forward Amendment 196, which records in the Act that no provision of the Bill may be used to revoke an institution’s royal charter—with the rather weasel words—“in its entirety”. It does not mean to say that the Government will not revoke parts of the royal charter. I do not expect a response today, but perhaps the Minister might write to us with some examples of how that power might be used in future. I ask the slightly deeper question: since we are now fully aware of the powers of the Privy Council—which seem to include the ability to go and get from Her Majesty the Queen in Council changes to any royal charter, including that of the BBC, without much publicity ever occurring—why on earth have the Government decided to put this forward in the Bill at all? I would be very interested to receive that answer. With that slight aside, I am happy to support the amendments.

[Viscount Younger of Leckie]

My Lords, first, I will be happy to write a letter to the noble Lord, Lord Stevenson, which I hope on this occasion will be a short one, to clarify some aspects of our Amendment 196.

I want to make some very brief remarks on Amendment 119A, tabled by the right reverend Prelate the Bishop of Winchester, and spoken to by the right reverend Prelate the Bishop of Oxford, which we fully support. We fully recognise the unique position that the most reverend Primate the Archbishop of Canterbury is in when he awards degrees to those who have served the Church. We agree that the Archbishop’s ability to award such degrees, which do not require a course of study, supervised research or assessment, should be left untouched by the OfS. This amendment achieves this, while being clear that any taught or research degrees awarded in the usual manner—for example, following a course of study as part of the Archbishop’s Examination in Theology—will remain covered by the Bill.

I am pleased with the progress we have made on these matters. With these amendments added, it leaves the Bill in very good shape by giving the OfS the powers it needs while being crystal clear that these are underpinned by strong safeguards. It strikes the right balance between institutional autonomy and protecting students, and the quality and reputation of our HE sector.

--- Later in debate ---

[Lord Stevenson of Balmacara]

My Lords, they used to say that real tennis was the game of kings. I suspect that the game of Parliament is listening to noble and learned Lords tearing into a piece of badly drafted legislation. We have enjoyed that very much. I will add one point and make a concluding comment. Clause 46 is the first of two. I hope that the noble and learned Lord will accept that Amendment 123 to Clause 56 is consequential as it deals with exactly the same matter as Amendment 117. We do not wish to encourage noble Lords to repeat themselves—although that would be much more fun. Secondly, we were not able to sign up to this amendment because when it was tabled it was immediately snapped up by others. Therefore, we were not able to express our public opinion of it. However, should the noble and learned Lord wish to test the opinion of the House, we will support him.

[Lord Young of Cookham]

My Lords, looking at the names on this amendment, it is certainly a gold star amendment, to use the language of the OfS. When I looked at it, I was relieved to see that the name of my noble and learned friend Lord Mackay was not on it. Therefore, I was somewhat disappointed when he rose to his feet to lend his formidable support to the amendment.

I can see that these amendments stem from concerns that there need to be appropriate safeguards and checks on the OfS’s powers under Clauses 43, 44 and 54. We fully agree and have listened to the concerns expressed in Committee. As a result, we have tabled two sets of amendments. First, there is Amendment 116 after Clause 44 and related amendments, which we have just discussed in an earlier debate. These ensure that the OfS must seek expert advice before granting degree-awarding powers or varying or revoking them on quality grounds. Secondly, there are amendments to Clauses 43, 44 and 54, which we have just debated in the group with Amendment 107. These amendments clearly set out the limited set of circumstances where the powers of revocation can be used, such as in cases of serious quality concerns. These further strengthen already very robust safeguards, including statutory processes guaranteeing providers the opportunity to make representations and a right of appeal. By the way, there is nothing in the Bill to prevent further appeals to higher courts.

Noble Lords also suggested in Committee an annual report on how the OfS exercises its powers of revocation under Clauses 43, 44 and 54. I accept that this is a good idea and would contribute to greater transparency. I can therefore tell noble Lords that in respect of each year where the OfS has made use of its powers to revoke degree-awarding powers or university title, we will ensure that a report be laid before Parliament that includes information on how the powers have been used.

Turning turn specifically to the amendment, the grounds for appeal in Clauses 46 and 56 have been carefully chosen and are largely based on what a judicial review would take into account. Despite the noble and learned Lord’s disparaging remarks about judicial review, it is the way in which public bodies are held accountable. These are sensible and appropriate grounds which balance the need for a regulator to make robust and confident decisions using its unique expertise with the need to hold that regulator to account where it makes decisions that are not within the reasonable scope of its powers. The Bill as drafted achieves that balance.

An appeal can be brought on three grounds, as the noble and learned Lord outlined. The first is that the decision was based on an error of fact. This means that if the OfS based its decision on wrong or incomplete facts, it can be overturned by the tribunal. The second ground is that a decision was wrong in law. We have specified in our amendments, to which I referred a moment ago, exactly when the OfS can revoke degree-awarding powers and/or university title, and how it has to go about it. For example, if the OfS decided to take the step of revocation outside the circumstances we have now specified in the Bill, its decision could be overturned by the First-tier Tribunal. Likewise, Clauses 45 and 55 provide that the OfS must have regard to representations made. If it did not do so, this could amount to being wrong in law and would therefore be grounds for appeal. Lastly, an appeal can be brought on the grounds that the decision was unreasonable. A provider could appeal against the OfS on the basis that its decision was unreasonable, having regard to the facts of its case.

Those grounds for appeal are complemented by strong procedural safeguards, which, again, are clearly set out in the Bill. These ensure that any decision made by the OfS must be legally correct and factually accurate and reflect a reasonable judgment, the OfS having carefully considered the available facts and applied its expertise according to the law. That is a very high standard to which the Bill holds the OfS to account.

By contrast, there are real risks in taking the route mapped by these amendments. They propose a more general and much less clean-cut ground of appeal—namely, that an appeal may be brought when the decision of the OfS is “wrong”, as explained by the noble and learned Lord. That is far less certain for the provider, for the regulator and indeed for the tribunal. It would also expand the range of cases that could go to appeal. What is “right” from one angle might always be seen as “wrong” from another. For example, will a provider that has its degree-awarding powers revoked on entirely justifiable grounds ever see that as anything other than “wrong”? Surely that provider should not have an automatic right of appeal, with all the delay, uncertainty and cost that that involves. The amendment would appear to allow that, as the balanced limitations of factual and legal accuracy and reasonableness would have been dispensed with.

Furthermore, the amendment would require the court to decide whether it agreed with the expert judgment reached by the OfS. Such an exercise would allow—indeed, it would require—a tribunal to put itself in the regulator’s shoes and then substitute its judgment for that of the OfS. I have to ask whether that is really the right place for the tribunal to be—asserting expertise in higher education rather than, in a more focused way, looking at lawfulness, factual accuracy and reasonableness. I respectfully suggest that it is not. Changing the grounds of appeal in this way would risk creating a process whereby the tribunals, rather than the OfS, regulated the HE sector. That is a powerful argument which noble Lords have so far not addressed.

I do not believe that the amendments are the right way to go—although they are well meant, I do not think they will take us in the right direction. Therefore, with respect, I ask the noble and learned Lord, Lord Judge, to withdraw his amendment.

--- Later in debate ---

[Lord Stevenson of Balmacara]

I was expecting the noble and learned Lord, Lord Mackay, to speak to Amendment 118 in the group, if he wishes to do so.

[Lord Mackay of Clashfern]

My Lords, I did not understand why this provision is in the Bill. I was rather surprised when I first saw it, and when I raised the point at a meeting, those promoting the Bill seemed to be almost equally surprised. However, I have now found out exactly what it is for. It is intended to deal with situations where someone has gained a degree through various nefarious practices and that is discovered. Once you understand that, it is quite normal and certainly not unexpected that the same provision should apply to other arrangements. However, this is a special one for this particular situation. I am happy with the explanation and I shall not press my amendment.

[Lord Stevenson of Balmacara]

My Lords, given that elucidation, I shall say much the same thing but in different words in relation to Amendment 119.

My name was attached to Amendment 117A and I have listened carefully to the comments of the noble Baroness, Lady Wolf. It is an offer to the Government to tidy up an area that needs more attention.

I turn first to a letter we received by email today just before we got into the Chamber. The Minister may have something to say on this point which may resolve the issue. I am grateful to the noble Baroness for her support on Amendment 119. It was spoken to when we tried to link it to an earlier group of amendments in case, as has happened, the Bill was amended to reflect a situation where validation routes are twofold. One route involves working with another institution or provider for at least four years—some courses are longer than four years—and then applying for the powers at that time. The other route is by having a tougher assessment arrangement, which is done through the Quality Assessment Committee of the Office for Students and the designated body appointed in this area. In those circumstances, it does not seem necessary that there would be a requirement at any stage in the future for the OfS also to be a validator.

The amendment would remove the infelicitous possibility that the body which is now called a regulator, the Office for Students—I wish it had another name—would not only ensure that validation arrangements operated throughout the sector but would also be a validator and the regulator of those two processes. That does not seem appropriate. However, in the letter today there is an announcement, which I am foreshadowing, which deals with the fact that there will be a process of consultation on the precise way in which the OfS will provide a validation service. That seems to covers the point very well, so we will not press the amendment.

[Lord Willetts]

I am encouraged by what we have just heard from the noble Lord, Lord Stevenson. I think that there is a kind of logical structure here which the removal of Clause 48 would damage. We have currently a lively set of arrangements for validating degrees carried out by a range of universities. I was involved, for example, in supporting a programme to create a new higher education institution in Herefordshire. When it tried to find a validator, it had a queue of universities that wished to be the validator. We have a lively market at the moment, although there are concerns that it may not always cover every case and is not as open as it should be.

There is a proposal that it should be possible, if necessary, for the Office for Students to commission a validating body if it is concerned that validating is not being done properly. However, in cases where it has not been able to commission arrangements that ensure validation, in the last resort it may itself be the validator. The noble Lord, Lord Stevenson, is right that it is unusual for a regulator also to be the validator, but I hope we will hear from the Minister that the circumstances in which that became necessary are rather remote. Given what is already happening, one would expect either the current arrangements for validating to be satisfactory or for the OfS to be able to commission a body that will undertake validation.

The argument for Clause 48, which it is proposed should be deleted, is that it is the logical long stop in the event that it has not been possible to commission anyone else to carry out the arrangements. On the basis that it is unlikely the power will be necessary, but we can understand why it has to be held in reserve, I think Clause 48 is needed and the amendment to remove it would leave a potential gap in the system. I hope we will hear more on that from the Minister.

Higher Education and Research Bill

Lord Stevenson of Balmacara Excerpts

Monday 6th March 2017 Lords Chamber

[Lord Young of Cookham]

My Lords, it is important that regulations that are made pursuant to powers are subject to the appropriate level of parliamentary scrutiny. We have thought very carefully about such powers in this Bill, particularly in the light of the report of the Delegated Powers and Regulatory Reform Committee. The government amendments in this group implement three of the recommendations that the DPRRC has made.

Specifically, Amendment 197 makes regulations under Clause 10, prescribing descriptions of provider to whom the transparency condition applies, subject to the affirmative procedure. Our policy intent, as set out in the White Paper Success as a Knowledge Economy, published in May 2016, is that a transparency condition will apply to approved and approved fee-cap providers on the register of higher education providers.

Amendment 198 makes regulations under Clause 38, prescribing descriptions of provider who will be eligible to receive OfS funding in the form of grants, loans or other payments, subject to the affirmative procedure. Subjecting these regulations to the affirmative procedure adds to the oversight Parliament has, compared with the current legislative arrangements.

Amendments 45, 200 and 201 ensure that the first set of regulations prescribing the higher, basic and floor amounts for the purposes of determining providers’ fee limits, will be subject to the affirmative procedure.

I thank the noble Baroness, Lady Fookes, and the members of the DPRRC for their thorough consideration of the Bill’s powers. I beg to move.

[Lord Stevenson of Balmacara (Lab)]

My Lords, it seems wrong to intrude on a private conversation between the two noble Lords. We are grateful to the Government for bringing forward these amendments, as recommended by the Delegated Powers and Regulatory Reform Committee.

Amendment 45 agreed.

--- Later in debate ---

[Baroness Brown of Cambridge (CB)]

My Lords, I will speak to Amendment 49, in my name and that of the noble Lord, Lord Stevenson of Balmacara, and give my wholehearted support to all the government amendments in this group.

Amendment 49 is a reinforcement of the registration conditions for higher education providers. It requires that it is not only the quality of provision and use of sector standards that can be subject to registration conditions but also the systems and processes that a provider has in place to ensure quality and standards are upheld. This provides an additional level of assurance of the ongoing maintenance of quality by a provider to the benefit of students.

I thank the Minister and the Bill team for their thoughtful work in bringing forward the government amendments on quality and standards. They effectively address the concerns of the sector, and of many noble Lords, that the definition of academic standards must be owned by the sector and not be in the remit of the Office for Students. The government amendments are, indeed, quite innovative in that they provide an implicit challenge to institutions in the sector to work together to define standards in other key areas—plagiarism might be a good example. These would be standards which the OfS could then use in its registration conditions. The Minister and the Bill team are to be commended for this forward-thinking approach, and I repeat my strong support for the government amendments. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, the noble Baroness, Lady Brown, has introduced this important group of amendments with great skill. Like the questions we had earlier on institutional autonomy, this issue was raised by a substantial number of individual institutions as being a barrier to them engaging more widely with the purposes of the Bill. It became a bit of a block to progress. We had a good go at it in Committee and we have had several meetings with the Minister, the Minister from the other place and the Bill team.

As the noble Baroness said, the Government have not only stood up to the plate and agreed to move on this but they have actually gone a little further. Like the noble Baroness, Lady Brown, I commend the idea that, within this apportionment between individual institutions and the sector, individual institutions have academic standards reserved to them. There is an implication that that work will not be deemed satisfactory unless it is done through collaboration, the development of an appropriate process and bringing forward something which we do not currently see—a better understanding of how every individual institution is not only independent and autonomous but part of a wider whole.

In that sense, this plays back to our debates on new Clause 1, which has been inserted in the Bill and which deals with the much wider context in which higher education institutions—universities particularly, in this case—must operate. We are very pleased with these amendments. We support them and look forward to hearing the Minister’s response.

Higher Education and Research Bill

Lord Stevenson of Balmacara Excerpts

Report: 1st sitting: House of Lords
Monday 6th March 2017 Lords Chamber

[Baroness Brown of Cambridge]

My Lords, I rise in opposition to Amendments 12 and 13, which are in the name of the noble Lord, Lord Lucas. In doing so I thank him for raising a very important point, but I suggest that we already have a very effective mechanism for doing what he wishes to see happen, which is the British Council. I urge the Minister to ensure that the British Council is properly funded to undertake talks of this sort in the future.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I have signed this amendment and all the others that make up this package, which is a substantial one; we should not underestimate the impact it will have. It is a most significant move for the Government to recognise the pressure of institutional autonomy right across the sector. It would be hard to overstate the impact of this coming together of the whole House with the Government to create an intervention in this area. We welcome it.

It is important also to recognise that the concession made was not just rearranging the existing wording—we acknowledge that the Bill already had a lot about institutional autonomy. Making not simply the OfS but the Secretary of State responsible for having regard to the need to protect institutional autonomy is a much more powerful approach. We should be cognisant of that as we accept the amendments.

It is important also to recognise that there is a gap. Although it has been pointed out that the UKRI is not a regulator in the same sense as the OfS, we will later move an amendment that proposes that the UKRI also have regard to institutional autonomy because there will be joint responsibilities in relation to research degrees, but also because these bodies will be operating with the same funding group—obviously, a smaller one in the case of the UKRI; nevertheless, it is important that we have equality of arms.

This has been a very successful case of trying to get a better Bill from what the Commons presented us with. It is a better Bill as a result of this intervention—of course, there is more to come. We should acknowledge that the leadership of the noble Lord, Lord Kerslake, and the support that he and I received from the noble Baronesses, Lady Wolf and Lady Brown, and the noble Baroness, Lady Garden, from the Liberal Democrats, has been instrumental in persuading the Government that they should take account of this issue.

In bringing attention to the need for new providers in Amendment 5, the noble and learned Lord, Lord Mackay, has done us a service by ensuring that we think not only of existing arrangements within the sector but new entrants. It is important that we pick up the theme behind his amendment and ensure that it is properly regarded as we proceed.

In concluding, I hope we can have the Minister’s assurance that all the amendments in this group will be taken as consequential if the lead amendment is passed.

[Viscount Younger of Leckie]

My Lords, I am grateful to the noble Lord, Lord Kerslake, for introducing this group of amendments and the helpful and constructive engagement I have had with him and many other noble Lords, not least the noble Lord, Lord Stevenson, the noble Baronesses, Lady Brown and Lady Wolf, and my noble friend Lord Waldegrave on the issue of institutional autonomy.

I am particularly grateful to the noble Lord, Lord Kerslake, for his amendment in Committee, which was widely supported across the House and which has provided an excellent template for the institutional autonomy protections that we are discussing today. Indeed, on issues across the Bill, I am grateful for the expert scrutiny the Bill had in Committee and the many constructive meetings that my honourable friend in the other place, Jo Johnson, and I have held with noble Lords since.

I said in Committee that we were listening and reflecting on the issues raised, so I hope that noble Lords will recognise that that is exactly what we have done through the government amendments. I am particularly pleased that institutional autonomy is one of the areas where we have found common ground. Institutional autonomy and academic freedom are the keystone of our higher education sector’s strength. Throughout the Bill, we have sought to protect these values, but we recognised and understood the importance of extending these protections to the work of the OfS and of enshrining institutional autonomy itself in legislation for the first time.

I turn to Amendment 5, spoken to by my noble and learned friend Lord Mackay. We have already seen new providers emerge that do not fit the stereotypical—often negative—description that has been previously offered. The Government welcome plans to introduce new models of provision, such as that proposed by the New Model in Technology & Engineering in Hereford. I reassure noble Lords—my noble and learned friend in particular—that the Bill already allows both the OfS and the Government to consider, encourage and respond to the emerging needs for new providers, so while I support the broad intent of Amendment 5, I feel it is unnecessary.

I should like to make a few further points. We believe that the duty on the OfS to have regard to the need to encourage competition between higher education providers and regulate in a proportionate manner will ensure that it encourages meeting the emerging needs of new providers. The OfS has many duties and there are already a variety of other measures in our reforms that will enable the Government, as well as the OfS, to support the need for new providers.

--- Later in debate ---

[Baroness O'Neill of Bengarve]

My Lords, I have some sympathy with getting the age statistics right. That is a crucial example because it is objective and not highly sensitive, at least in my view. However, most of the other protected characteristics are not susceptible of statistically robust estimation. People do not always want to declare whether they are pregnant or to declare their ethnicity. I discovered that young people of mixed background did not wish to take sides between their parents, as they put it. People do not always wish to declare their sexual orientation, particularly when they are very young. The result is that one has an enormous number of “no information” entries in these statistics. To use this information in a statistically responsible way is not a simple matter. However, I exempt age. I would, until recently, have exempted gender because I think most people will give a simple answer on that. However, I fear that the information one actually records is not always robust.

[Lord Stevenson of Balmacara]

My Lords, this has been a very good and interesting debate. I think that there are some questions to which the Government will want to respond and I will not overegg the pudding at this stage. However, the question of why we are not including protected characteristics, as mentioned by the noble and learned Lord, Lord Wallace, is interesting. Amendments 16 and 18 are helpful in this regard. I take the points made by the noble Baroness, who is expert in these matters. However, if we as a country do not start to set out these requirements in terms of a whole range of protected characteristics, we will be the loser in the long run. It may be just be a question of how we do that.

This group of amendments also contains important first steps towards a more engaged transfer and credit transfer arrangement for students in relation to the higher education sector, which I welcome. However, I again wonder why the Government have not thought to take into account Amendments 47, 128 and 129. It seems to me that they would help progress in this regard, which is something we all support.

[Viscount Younger of Leckie]

First, I reassure my noble friend Lord Lucas that Clause 10(2) already requires higher education institutions to publish the information contained within the transparency duty. We expect prospective students to be able to access this easily on providers’ websites. I further reassure my noble friend and the noble Lords, Lord Triesman and Lord Willis, among others, that this information will also be shared with the OfS with the intention of presenting these data in a comparable form to students, commentators and advisers.

To respond to the noble and learned Lord, Lord Wallace, I say that noble Lords will recall that we have concerns about legislating to add a wide range of additional characteristics to the duty due to the quality and comparability of the data as well as the disclosive nature of some of the information. However, having listened to noble Lords, and in particular to the noble Lords whom I mentioned just now, we have reflected on their suggestions, and I am pleased to make a commitment to the House today. The Government will, through guidance, ask the OfS to consult on what other information should be published by individual institutions with a view to making their record on widening participation even more transparent.

We expect the consultation to consider whether specific additional information should be made available by institutions. We expect this to include consideration of whether the protected characteristics under the Equality Act 2010 should be captured, including categories such as disability and age. However, the consultation will not limit itself to the protected characteristics and should also look at categories such as care leavers. This will enable a considered view of what additional information should be published by providers, balancing the desire for greater transparency around access and participation with considerations around the robustness and comparability of data, student privacy and the regulatory burden on providers. Universities will be expected to respond to the outcome of the consultation as part of their future access and participation plans following further guidance, once we have established best practice.

I hope that it is clear that we have listened and reflected on the amendments tabled in Committee. The inclusion of attainment will make the transparency condition more effective, and the additional commitment to consult on what other information should be made available will help drive equality of opportunity for all students.

I now turn to the amendments relating to student transfer—

--- Later in debate ---

[Baroness Blackstone]

My Lords, I can see why the Government want to link the quality of teaching to fees. I assume that behind it is that they need a kind of sanction to do something about those universities which are not providing adequate teaching. I say to the noble Baroness, Lady Deech, that the best teaching is not necessarily provided by those universities which do the best research; in other words, the high-status universities. Some of the new universities have excellent teaching quality, where some of the best research universities do not give it enough attention.

I support what my noble friend Lord Lipsey said. It is not the right time to attach the decision about the fees that can be charged to the TEF, because we do not have a TEF that is yet suitable and up to scratch in how it will operate. It is putting the cart before the horse. There may be some date in the future when it might be appropriate for the ability to increase fees to be related to the quality of teaching, but we have not reached that point. We really need to get our metrics right and provide a TEF that is fit for the job that it is being asked to do.

[Lord Stevenson of Balmacara]

My Lords, this has been a very good debate and it anticipates another debate which, at this rate of progress, we will be able to schedule and advertise for those noble Lords who wish to come back and listen to it for Wednesday just after Oral Questions, when we will be returning to many of the themes. This is quite a narrow amendment. The amendment before noble Lords is not about what metrics could be used or other issues relating to the TEF, as it is called. It specifically tries to avoid that, to leave space for that debate to take place on Wednesday. It specifically tries, though, to break the link that might be established between any scheme established under Clause 26 and the ranking of higher education providers as to the fees or the number of students they may or may not recruit.

On a number of occasions the Minister has been at pains to point out that, throughout the very long period we kept the House sitting in Committee on the Bill, he was, in complete contradiction to the impression he gave, listening and, indeed, in some cases, reflecting. It was sometimes difficult to get the nuance between listening and reflecting but those were the words he used. We were doing the same. We have been listening to and reflecting on some of the responses we have heard to the very good cases that have been made around this aspect of the Bill, and I have to say that, having listened and reflected, I do not think he has made the case well, but the case that has been made around the Chamber this afternoon is exactly on spot.

If you want to raise the fees in higher education to accommodate the cost increases referred to by the noble Lord, Lord Bilimoria, it has been possible since 2004, and Labour’s Higher Education Act, to raise fees by inflation. It was done routinely between 2007 and 2012 by two successive Governments. There is no reason at all why the Government should not bring forward a statutory instrument under the terms of the Act that makes provision for the power to do so. There is no need, in fact, to anticipate what may be a good system for measuring higher education by linking it to the teaching quality that has been discovered by a half-baked scheme that is not yet half way through its pilot system. The case was made very well by the noble Lord, Lord Kerslake, and by the noble Baroness, Lady Garden of Frognal. The case for linking the quality of education and fees, or the quality of education and the number of students, is completely hollow. I very much hope that if the noble Lord wishes to test the opinion of the House, he will do so. We will support him.

[Viscount Younger of Leckie]

My Lords, before I discuss fees, I would like first to be clear that the Government welcome genuine international students, and to reiterate the confirmation that I offered in Committee that we have no plans to cap the number of genuine students who can come to the UK to study, nor to limit an institution’s ability to recruit genuine international students, based on its TEF rating or on any other basis.

As well as the link to student numbers, this amendment would remove an important principle at the heart of the TEF: the link to fees. The TEF is intended to rebalance the priority given to teaching and learning compared to research. Funding for teaching is currently based on quantity, whereas research is funded on quality. It was a Conservative Government who first introduced early versions of the research excellence framework. Over the past 30 years, the principle of linking funding to quality has incentivised the UK’s research base to develop into the world-leading sector that we have today. We want to apply the same principle that has driven such continuous improvement in research to teaching. Linking fees to the TEF will provide strong reputational and financial incentives to prioritise the student learning experience.

It is important that high-quality institutions can maintain fees in line with inflation if we are to ensure that the sector remains sustainable. As I pointed out in Committee, the £9,000 fees introduced in 2012 are worth only £8,500 today and will be worth less than £8,000 by the end of the Parliament. If we want to provide the best-quality education in our universities, and to compete with our global rivals, universities need the resource to invest in their teaching facilities. This is why the Universities UK board unanimously supported the link between an effective TEF and fee rises. Some 299 institutions have voluntarily applied to take part in the TEF this year out of about 400: that represents a big majority. This includes the majority of the established higher education sector, including all the English Russell group universities. I think that noble Lords will agree that this represents a very encouraging and excellent endorsement of the current scheme.

Furthermore, as GuildHE said:

“The link between the TEF and inflation increases in fee and loan caps makes sense ... When the £9000 fee cap was introduced in 2012/13, the BIS spending review assumption was that it would rise by inflation each year. Instead, the price has been held flat for four years. Without an increase to take account of rising teaching costs, the ability of institutions to invest in the quality of the learning experience on offer will, inevitably, decline”.


However, there will be no something for nothing. Make no mistake: if this amendment is enacted the sector will lose £16 billion over the course of the next 10 years. This is the value of the funding we intend to make available for institutions through the TEF. We will not allow universities to raise their fees unless they can demonstrate, through the TEF, that their teaching is of the highest quality.

Technical and Further Education Bill

Lord Stevenson of Balmacara Excerpts

Committee: 3rd sitting (Hansard): House of Lords
Wednesday 1st March 2017 Grand Committee

Moved by

[Lord Stevenson of Balmacara]

37: Clause 14, page 7, line 38, at end insert—
“( ) minimise the risk to a local community of a long-term loss of technical and further education provision.”

[Lord Stevenson of Balmacara (Lab)]

My Lords, it is a pleasure to appear in the Committee. I have been present on various occasions during the first two sittings, but I have not been able to find an issue on which I wanted to speak; therefore I come with my powder dry.

We have no argument of substance on this part of the Bill, because we understand what is happening. It is essentially a good housekeeping measure, rather than a threat to any existing or future institutions. It arises from two sources. First, there is a proper and appropriate sense of wanting to ensure that in any default situation, such as liquidation or insolvency, a process is in place and all the major players know what happens and how. It also comes from a wider consideration of how public services are procured and delivered.

In the good old days, as some might say—I say it in heavy quotes—public provision of such services as further education, but including utilities more generally, would always have the underlying assumption that the Government of the day would carry any debts incurred. Of course, that does not happen under privatisation—there is no particular reason why it should—but the responsibility for continuing work that is in the public interest still has to be resolved. That is why, over the past 25 to 30 years, there has been a growth in special regimes for insolvency. They are not unusual. They are broadly all of the same pattern. That is unsurprising as they come from one cutting shop: the Insolvency Service. They carry a common approach: they are instituted to ensure that, where it is appropriate and necessary, it is possible to intervene in the ordinary processes of insolvency or voluntary liquidation to the extent to which it is thought proper that the purposes for which the service exists are maintained, to ensure that those who are relying on it or have made it part of their lives in good faith are not let down by any cost-cutting arrangement.

Having said all that, we have tabled some probing amendments, to which I hope that we will get good responses on the record. Nothing will be unexpected—much of it came up in the other place—but we have learned a bit more about how the system operates, so there may be a slightly sharper focus.

I move Amendment 37 and speak to Amendments 38 and 39. This first group focuses on the education administrator, who is the person to be appointed by the court—the courts can act only on the request of the Secretary of State in England or Wales, depending on which territory they are in—and, if appointed, has responsibilities which will be set out both in the Bill and the broader range of insolvency legislation alluded to in the primary legislation; I expect that regulations to follow will fill in any gaps. We are not at variance with the Government in proposing that the system applies, although there will be things that we want to probe later.

The purpose of these three amendments, taken together, is on the question of whether we have got the right person to do this work. We have not seen many colleges go into liquidation or insolvency, which is a good thing. We were reassured in another place—so we do not expect it—that nothing in the Bill should be read as taken to imply that the Government have in mind a raft of closures. On the other hand it is fair to ask the Minister, when he comes to respond, to help us a little about what the context is for this.

The figures provided by the Minister for Apprenticeships and Skills in the other place were slightly obscure. He said that,

“80% of colleges are either good or outstanding”,


and that some,

“59% of institutions are in good financial health and 52% are operating with a surplus”.—[Official Report, Commons, 14/11/16; col. 80.]

One can of course read that the other way round: you could say that 48% are not operating with a surplus and that a situation may therefore arise which we are not fully apprised of. The Minister might wish to comment on that. I do not necessarily see that as an issue and, if he wishes to take time to write to us, we would be happy with that.

The context is also a little more complex, in the sense that we are well aware that there is a more general decline in further education. The ongoing work of the area reviews may or may not lead to closure as a result of mergers. Mergers cannot be imposed on the system but if the system wanted to do that and if a particular college was weaker, we may find this issue in front of us in a relatively short time. The procedures therefore obviously need to be right but, if the Minister could say a little more in that context about his perception from the centre of whether a number of closures will arise from the area reviews, that would obviously be interesting. We do not know of any and are aware that work is going on but some sense of that, if not the actual detailed numbers, would be helpful.

In the other place, the Minister was pressed a little about the context of what I have been saying. He came out with a nice rubric when he said that Part 2 of the Bill was,

“about protection, insurance, prudence and caution”.—[Official Report, Commons, Technical and Further Education Bill Committee, 29/11/16; col. 166.]

He was not picked up about that list of words. It does not quite have the ring of an aphorism about it but it is an interesting list. Would the Minister like to reflect on whether that is his reading of the situation? I take it slightly differently: I think this is a prudent, sensible and cautionary approach, as I do not see any red lights arising from it and gleaming in the dark that would cause us to have difficulty, and that the issues are appropriate. Those are the general questions.

On the questions raised by the amendments, Amendment 37 questions whether we are right in assuming that, at present, the Bill tends to focus the attention in relation to colleges and their continuation on a systemic approach. That was slightly picked up by the area reviews as well, in looking at the holistic approach to an area, although from the bottom up—in other words, from the locality—FE colleges are often seen as important bulwarks of local community activity. Particularly in rural areas and areas of lower density, they can provide a centre not just of education and training but for other activities, so there is a wider context for this. Amendment 37 asks that the education administration system, particularly the education administrator, should, in addition to the list in the Bill, take in the need to,

“minimise the risk to a local community of a long-term loss of technical and further education provision”.

That will be an important issue for many areas and I will be interested to see the response.

Amendment 38 would give more detail than is currently in the Bill about the consultations, discussions and debates that must take place before the education administrator takes forward the proposals that may come to it. We will obviously come to a wider view about this in the next group. This would include the “quality of education provided”, the capacity of other bodies or institutions and,

“the infrastructure of the local area”—

again, the reference is to local rather than national issues. An issue that came up strongly in discussions in the other place was of how students, many of whom will be relatively young, will function if they have to add a significant transport arrangement to their other education requirements. How exactly does that fit in with some of the overarching issues we will come on to, in relation to the balance between maintaining a provision in a place and the need to provide local services and community support in that area, as opposed to the needs of the students in terms of the qualifications they are trying to obtain, which might be better dealt with in another college, perhaps a couple of hours’ travel away? One can see the impact that would have in terms of community, and on the individual. A slightly more detailed list, as in Amendment 38, may be overprescriptive but the intention is to make sure that wider consideration than a simple binary question—open or shut—should face the education administrator.

Thirdly, on Amendment 39, the question is of who should be consulted. There is obviously an expectation, and comforting words were given in the other place when this issue was discussed. However, we have tabled an amendment that specifies that the students in particular—they are often omitted in these considerations —should be consulted, and that staff and recognised unions at the body concerned should also be included.

[Lord Storey (LD)]

Given that insolvency is a major part of the Bill, many of us were concerned that there might be something hidden that we did not appreciate or understand, which is perhaps unusual. I thank the civil servants. I hate that term. They are civil; they should not be servants. My noble friend Lady Garden and I met them yesterday to talk about insolvency, and I came away very reassured. Actually, I almost did an about-turn and felt that further education was protected in many respects.

The amendments are right. I do not foresee FE colleges becoming insolvent, because the new measures protect them in a more robust way than currently. During the area reviews, there has been a safety blanket. When they are finished and the new regime comes into place, it will be a much better landscape for FE to operate in. Having said that, in the 0.001% where something happens, it is right to point out that students need to be considered, as do the community and the staff. That is particularly so in rural areas. If a college goes in a rural area, the loss of it and its courses can be devastating to its students.

I will go along with it but I am never quite sure about “consultation”. Of course one can consult. If in the new landscape a college is on the road to insolvency, presumably we would pick that up pretty early on. It would not be a case of its suddenly being insolvent—“By the way, we’re closing down and we’d better consult students and staff”. We would see the process happening gradually. Any well-managed system would of course consult those bodies. When I see “consultation”, I always ask how we will consult. Is it a tick-box exercise, or a letter to everybody? When we have done the consultation what do we do with that information, or is it just, “It looks good so we’ll say it”? I understand the thought behind the amendment, however.

These amendments are okay. I am just beginning to understand the Government’s desire—I am pleased about it—that, under the new combined authorities regime, combined authorities will be involved in the adult education part of further education. I do not yet understand how that happens in practice as well as principle. I have been involved in a couple of emails about that, but I would like to understand it before Report. Having said that, I am happy with the amendments and I guess we will support them.

[The Parliamentary Under-Secretary of State, Department for Education (Lord Nash) (Con)]

My Lords, I am grateful to the noble Lords, Lord Watson and Lord Hunt, for these three amendments, to the noble Lord, Lord Stevenson, for his remarks supporting them and to the noble Lord, Lord Storey, for his comments.

These amendments relate to assessing the impact of the proposed insolvency regime on further education colleges. Before I deal with individual amendments, I shall respond to some of the general points made by the noble Lord, Lord Stevenson, and if I do not cover them all I will certainly write to him. Following the area reviews, all colleges should be on a sound financial footing for the longer term. That is part of the reason behind the area reviews. These measures will not come into force until after the recommendations of the area reviews have been implemented. There will be no closures as a result of the reviews. Colleges are working together to remove overcapacity in their area and to better align their offer to local employers’ needs. Some colleges may merge as a result, but there will be no insolvencies as a direct result of the reviews.

I believe that Amendment 37 is intended to ensure that the special objective offers protection not only to existing students of an insolvent college but to those of the future. In that regard, noble Lords and I share common ground. Indeed, that is the purpose of our programme of area reviews. We are working with colleges, local authorities and other local stakeholders to ensure that FE bodies are put on a strong and resilient footing. This is the best way to safeguard the interests of all students. Delivering strong, sustainable colleges that can provide young people now and in the future with the opportunity to pursue courses right for them will offer them the opportunity to achieve their full potential.

In the unlikely event that an FE body were to become insolvent, our first priority would, rightly, be to the existing students, whose studies are likely to be directly affected. That is the purpose of the special objective. While we cannot know how the education administrator will propose to achieve the special objective in every insolvency, as that will clearly depend on the circumstances of each case, it seems likely that the preferred solution would be to find an alternative provider to take over provision at the insolvent body’s campus. That would almost certainly prove least disruptive for the students involved. However, that may not be possible or the right outcome. It might ultimately be better for existing and future students to attend other colleges where they may have access to a greater choice of course, better facilities and the like.

I recognise noble Lords’ concern that moving to a different provider might mean travelling greater distances, with a consequent increase in travel costs. While many students would be willing to travel to access the right provision—a point the FE commissioner made when he gave evidence to the Committee in the other place—there will be those for whom this would be a challenge. Colleges are already able to provide financial support to help eligible students with their travel costs, and this will extend to students transferring in from an insolvent college. In addition, the education administrator may be able to make provision for such costs where it is for the purpose of pursuing the special objective.

There is the possibility that a college that is the only FE provider in the wider area may become insolvent; for example, in a rural area such as Devon or Cornwall. Were that to happen, I assure noble Lords that the Government could not and would not ignore their wider responsibility to students in the area. No Government would leave an area without any FE provision. However, this is a matter for the Government of the day to consider, not the education administrator.

I shall now respond to Amendment 38. Clause 14 sets out the fundamental principle underpinning the special administration regime we are introducing in the Bill. In the unlikely—I must emphasise “unlikely”—event that an FE body becomes insolvent, we are acting to ensure that disruption to students’ studies is avoided or minimised as far as possible. That is the purpose of the special objective set out in subsection (1). Pursuit of that objective will govern all the actions of the education administrator. It will be for the education administrator to decide how the special objective can best be achieved. Whether it is one of the solutions suggested in subsection (2), a combination of them or something different will depend on the special circumstances of the college or FE body. Only by considering these issues will the education administrator be in a position to come to a view on the most appropriate approach. As we all know, something that might be right in one situation will not necessarily be right in another, so, in a way, I agree with Amendment 38. Noble Lords are right that there are a number of assessments that the education administrator should carry out before taking any action to achieve the special objective, including assessments of the capacity of other bodies or institutions to undertake any additional functions or provide education to additional students.

Noble Lords are right, too, that there should be discussion with those most directly affected by the decisions to be taken—the students, the staff and their unions. Where I think we differ is that I do not believe such assessments or discussions need to be prescribed in legislation. As my colleague the Minister for Apprenticeships and Skills said when this matter was debated in the other place:

“It is inconceivable that they,”


by which he meant the education administrator,

“would draw up proposals for achieving the special objective without having had discussions with a wide range of stakeholders, such as the Further Education Commissioner, student bodies and others, and without considering a wide range of pertinent issues”.—[Official Report, Commons, 9/1/17; col. 113.]

I wholeheartedly share this view. As the Minister made clear in the other place—and I do here today—it is our clear expectation that the education administrator will engage fully with those who have the knowledge and experience to aid them in developing their proposals: the commissioner, staff and students, local authorities and other providers.

When we refer to avoiding or minimising disruption to student studies, this is not just about keeping students’ timetables unchanged or ensuring that they remain at the same campus—although, in reality, this might well be the case. It is also about ensuring that where it is necessary to transfer students, factors such as those identified by noble Lords are taken into consideration. In developing their proposals, the education administrator will be expected to consider the quality of the alternative provision, as well as the impact of travel distances if students need to complete their studies at another location.

Of course, some trade-off or compromise between the different factors might be necessary, but this will be for the education administrator to address in the particular circumstances. If students find themselves having to travel to another location, I recognise that they may incur additional travel costs. Where this is the case they may be eligible, as I have said, for the 16-to-19 bursary fund, or the education administrator may consider setting up a specific scheme for them paid for by from any funding provided by the Secretary of State or Welsh Ministers.

I turn now to Amendment 39. In developing the special administration regime we have been concerned to ensure that the process should take no longer than necessary. Concerns have previously been expressed, including during debate in the other place, about the time a special administration might take. I share these concerns. However speedily the special administration is concluded, it will be too long for those involved. Staff, students and creditors will want certainty about what will happen to them at the earliest opportunity. Amendment 39, which seeks to require the education administrator to consult students, staff and the trade unions of the FE body before making any decisions on how to achieve the special objective, would inevitably lengthen the process but would be unlikely in reality to have any real benefit to the education administrator. Indeed, it may fetter his or her discretion to find the best way of achieving the special objective to the disadvantage of all concerned.

We are not disputing that the issues raised by noble Lords are important. They are. But, as I hope I have made clear, they cannot help but constitute a major element of the education administrator’s considerations in developing his or her proposals and there is therefore no need to legislate in this case. I hope the noble Lord will feel reassured enough by my explanations to withdraw the amendment.

[Lord Stevenson of Balmacara]

My Lords, I thank the noble Lord, Lord Storey, for his support for these amendments and his comments about what we are trying to achieve with them. I think that those were picked up by the Minister, and I thank him too for taking the time to go through some of the issues and recognise that they had a bearing on this, should insolvency happen. The fact that these words are now on the record is a very good thing.

We particularly recognise that where provision has to be provided at a distance under special measures, travel will become a material issue. Confirmation again that costs could be considered within that is very important. We accept that it would be wrong to tie the hands of the education administrator if, by having a list in the Bill, damage was done to how he or she approaches his or her work. I do not think that that was the intention, but I recognise the danger. The issues were engaged with by the Minister and were recorded in Hansard, which will be sufficient to ensure that these points are not ignored at the appropriate time.

We might want to come back to the question of how and on what basis the comparison between the provision made in one institution that might have to close and another will be done in practice, but that comes under the next group of amendments. For the moment, I beg leave to withdraw the amendment.

Amendment 37 withdrawn.

--- Later in debate ---

Moved by

[Lord Stevenson of Balmacara]

40: Clause 15, page 8, line 11, at end insert “, and has relevant experience and knowledge of the further education sector.”

[Lord Stevenson of Balmacara]

My Lords, the amendments in this group are rather unfortunately grouped together, as there are two issues. I will take them in a slightly odd order to bring out the points. I hope that will make it easier to engage when the debate starts.

Amendment 40 is again about the education administrator. The point that we ended the last group on is the question of whether that person would have sufficient relevance, experience and knowledge of the further education sector. Those persons who have responsibility for doing insolvencies and wind-ups are usually accountants, who are the butt of staple jokes about vision, intelligence and depth of understanding. Of course, I am an accountant, so I can say all these things. On the other hand, it is fair to say that the judgments that the person responsible for a special education administration system are going to have to make will rather stretch that stereotyped approach, because effectively that person will take over the responsibilities of running an FE college with thousands of students and making decisions that will affect thousands of lives on a longer-term basis.

There are some big issues here. Given the fact that I know one or two insolvency practitioners, it would be a stretch to expect that group to be expanded in a short enough time to include people with experience. In the unlikely event that we have a rash of these insolvencies, experience will surely be increased and the problem will solve itself. But there is a gap here: No particular solutions come to mind, but the question will continue through our discussions today about how the expertise necessary to make some of those judgments will be gained.

Other amendments in this group, particularly Amendment 44, suggest that it may be necessary to make sure, in regulations if not in the Bill, that the person appointed as the education administrator has access without bar or hindrance—certainly no barrier should be put in place—to receiving the sort of advice that will be required to make the decisions that they will need to make in running an FE college. The proposal in Amendment 44 that the,

“education administrator may, in performing … functions … request information, advice or guidance from practitioners with an understanding of education”,

is meant in a permissive and encouraging way, rather than as a statutory duty. Nevertheless, the point is well made, and I look forward to hearing what the Minister says.

The meat of this group is in Amendments 42, 43 and 46A. That last amendment is a late addition, because I realised in preparing for the Committee that we could not get to the point without an additional amendment. I apologise for the late tabling of it. The scheme that we are talking about can come into existence only when the Secretary of State decides that it will do so, and only with the permission of the court, so there are already two steps in the process for a college that is going into insolvency, for which there will be checks, balances, discussions and debates, and some context will be provided. I am sure that that is an appropriate and effective way of going forward. But with the appointment of the education administrator comes the next stage in the process; that person will take over the responsibilities previously held by the owners of the operation and will have to deal day to day with the problems of running the college as they go forward.

I would be interested to know whether any work has been done for the Government on roughly what proportion of the insolvencies or liquidations it is expected will go into special administration as opposed to the normal routes, because the law already provides for companies that operate many activities, one of which would be education, to go insolvent or become bankrupt. There is a process under which that operates. We would not expect it to operate in many cases because it is a fairly brutal process.

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[Baroness Buscombe (Con)]

My Lords, I am grateful to the noble Lords who have put their names to this group of amendments. I shall begin with Amendments 40 and 44. I realise that the noble Lord, Lord Stevenson, also referenced Amendment 46A, regarding creditors. I will get to that but if he and other noble Lords could bear with me, it would be rather easier if I could do this sequentially.

On Amendments 40 and 44, then, as is the case with other special administration regimes, Clause 15 provides that the person to be appointed as the education administrator must be someone who is qualified to act as an insolvency practitioner in relation to the FE body. This is the only criterion that must be satisfied for appointment as an education administrator.

Amendment 40, however, would require the person appointed as the education administrator to have relevant experience and knowledge of the further education sector, as noble Lords have said, in addition to being qualified to act as an insolvency practitioner. Saving the blushes of the noble Lord, Lord Stevenson, he is a very good example of accountants who have a breadth of perspective—indeed, I should declare an interest as I am married to an accountant who has a fantastic breadth of perspective—so we should not underestimate their ability to address different sectors with the same amount of expertise.

While such experience may be desirable, it is certainly not essential. Noble Lords familiar with the company insolvency regime will know that insolvency practitioners are often appointed to administer companies in sectors where they have little or no experience. That does not prevent them carrying out their duties successfully; it is their ability to understand and apply the different options available to them in the insolvency toolkit that is of most importance, not a detailed knowledge of the sector or the company. It is no different in an education administration.

In his evidence to the Committee in another place Mr Stephen Harris, an experienced insolvency practitioner with Ernst & Young, said that:

“From an insolvency practitioner’s perspective, it is worth standing back and recognising that insolvency practitioners are not train drivers, or people who spend their life in the railway or the London Underground, when it comes to a special administration regime, nor are they specialist property developers. They come to each situation afresh. One comforting thing that insolvency practitioners bring is recognising when they need to keep in place the existing management structure in a corporate sense, or the workforce in a pastoral sense, recognising that those people have skills and qualifications that they as an office holder do not necessarily have, and also”—


this is key—in bringing,

“outside specialist help to continuing the duties of education administrator should the need arise. That is … part and parcel of any trading insolvency regime”.—[Official Report, Commons, Technical and Further Education Bill Committee, 22/11/16; col. 46.]

[Lord Stevenson of Balmacara]

What has just been said is true and I understand exactly where the Minister is coming from but, in a sense, she is talking about traditional creditor-led insolvency. That is not what we are talking about. As I am an accountant with a broad vision, I can extend to make the point that we are talking about replacing a board of governors, with expertise from all around the table, a senior management team, heads of departments, lecturers, a whole panoply of technical and support workers and everything else with one person, and that person is not doing the day job. The day job is getting the creditors into a room and banging their heads together until they settle for 10% or about that level, and then going away. This is about running an institution, perhaps for a long period and on a very complicated basis. It is not quite the same.

[Baroness Buscombe]

I accept the point, but I re-emphasise therefore the importance of that person bringing in outside expertise to support them in the process. I also ought to make the practical point that we would be hard pressed to find many insolvency practitioners who had this expertise as a matter of course. Maybe there are one or two, but I do not know how many.

Mr Harris rightly made the point that the education administrator is similar to all the other special administrator roles, and I share his view. It is not necessary for the education administrator to have direct experience and knowledge of the education sector, but I expect—indeed, I am sure that we all expect—the education administrator to avail themselves of the advice and guidance of those around them. I am being a little repetitive, but this is an important point. I mean not only the management team and staff of the insolvent college but the governors, the further education commissioner, the local authorities and others. Indeed, I cannot conceive of a situation where an education administrator would act in isolation, developing their proposals for meeting the special objective and protecting students without first discussing them with a wide range of stakeholders.

Amendment 44 provides that the education administrator should be able to request information, advice and guidance from those with an understanding of education in performing their functions for the purposes of achieving the special objective. I wholly agree with the purpose of this amendment. Of course it will be important for the education administrator to take advice from experts in the sector in carrying out their functions. As I said, this is precisely how we expect the education administrator to operate. The leadership team in the further education body will be in place to provide support on the day-to-day running of the college and to provide information to assist the education administrator in their task of achieving the special objective, if possible. So too will the further education and sixth-form commissioners and their teams, as well as the officials in the Minister’s department. The education administrator will of course be free to seek advice from any other source that they may consider. We therefore believe that there is no need to provide in the Bill for something which the education administrator is free—and encouraged—to do.

I would make the point, as I often do in situations like this, that we want to be careful not to be too prescriptive in primary legislation, particularly when the Bill, as I said on Monday, really sets out a framework for how these processes should be managed. We do not want to be too prescriptive up front. I want to respond to a number of issues but I shall leave them until I have finished replying to this group of amendments, to be clear that I can cover everything that noble Lords have asked of me.

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[Baroness Buscombe]

I am clutching a response to the noble Baroness’s earlier question which is on point. Clauses 26 and 28 allow the Secretary of State to provide the education administrator with indemnities or guarantees where that is necessary or appropriate. The education administrator will be able to apply to be discharged from office when they believe that they have achieved the special objective.

It may also help if I move on to Amendment 46A which specifically references creditors. Although we share common ground in our commitment to ensuring that if a further education body were to become insolvent, students would be placed at the heart of the subsequent administration process through the special objective, we do not share common ground here.

Clause 5 applies existing company insolvency law to further education colleges. The long-standing insolvency regime ensures that the interests of creditors are protected when a company becomes insolvent. Without such protection, lenders would rightly change their lending behaviours, such as by imposing higher interest rates and lending lower amounts. Other businesses would also become more cautious in trading with companies they perceived to be at risk of failing. This would ultimately paralyse growth. The same is true of the further education sector. So, while we are all agreed that there is a need to protect students’ studies—and that is the purpose of the special administration regime—there is also a need to have regard to the interests of creditors.

Through the special administration regime, we are rightly placing the protection of students’ studies ahead of the interests of creditors. However, as I said, this does not mean that the interests of creditors can, or should, be ignored. That would undoubtedly damage the further education sector, and I am sure that colleges themselves would be opposed to such action.

Subsections (4) and (5) make clear, therefore, that where the education administrator has a choice between courses of action that equally meet the special objective and protect students, they must follow the approach which achieves the best result for creditors and, where the college is run by a company, the company’s members. This delivers both protection for student studies and the reassurance that creditors, particularly lenders, need to ensure that the further education sector continues to be able to grow and improve to meet the needs of young people.

I want to respond to questions about the banks. Gareth Jones of Santander said:

“Overall, from our perspective, we are still very supportive of the sector—still looking to grow our exposure to the sector and grow our lending book. On the Bill and the proposed insolvency regime, we are actually supportive of the clarity that they provide”—[Official Report, Commons, Technical and Further Education Bill Committee, 22/11/16; col. 38.]


I was asked whether we are afraid that commercial debt will dry up for colleges as banks reassess their risk profiles, which is a critical point. The answer is no. Banks make lending decisions based on many considerations, and of course we expect them to reassess the risk profile of the sector now that exceptional financial support will no longer be available, but we expect them to continue to lend, particularly in light of the good work being done through the area review to build financially stable and resilient colleges. If this means a careful assessment of an individual college, its business plan and management, that is a good thing.

I hope that I have been able to answer all noble Lords’ questions on this group of amendments. If not, I will be happy to write to noble Lords but, on the basis of what I have been able to say this afternoon, I hope that the noble Lord will feel able to withdraw his amendment.

[Lord Stevenson of Balmacara]

I thank those who have spoken in the debate for their questions, which are at the heart of the issues we raised. As I said at the beginning, this is a group in two parts. The questions about the individual appointed were well answered by the Minister; I am happy on that. There is a big task here. While it is true that the Bill says that the education administrator would be appointed only if they have the capacity to do the work, experience may well be lacking. We may be in difficulty there. On the other hand, I also made the point that we are talking about a specialist area in which there may be some growth in expertise that will allow us to get through that.

The noble Baroness, Lady Garden, and my noble friend Lady Cohen made points about how we balance the issues in the special administration system between the ongoing requirements of the students, the priority given them in the Bill and the rather odd words that appear in Clause 22. They which relate to a subset, not all of the groups in FE—I take that point—but they nevertheless imply, on a casual reading, that creditors will not be significantly disadvantaged in the long run because the function of the administration is to be carried out in a way that achieves the best results for the company’s creditors as a whole and, subject to that, the company’s members: its shareholders or shareholder equivalents.

I do not think there is an answer to this across the table. It might be sensible to have a meeting. The noble Lord, Lord Storey, said that he had a good briefing from officials; I did not have that chance. Perhaps if I could have a relatively short meeting on some of the technical issues here. That might be helpful in trying to tease this out. I do not think we are far apart on this. It is difficult. A bit of reassurance is required and, if the experience of the noble Lord, Lord Storey, is anything to go by, that might be helpful. In the interim, I beg leave to withdraw the amendment.

Amendment 40 withdrawn.

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Moved by

[Lord Stevenson of Balmacara]

41: Clause 18, page 9, line 15, at end insert—
“( ) suspend the Office for Students' protection action for students.”

[Lord Stevenson of Balmacara]

This should be relatively quick. Clause 18 contains a list of measures to be taken under the power of the court on hearing an initial application—presumably for the purposes of clearing the ground so that the individual who is appointed educational administrator has a narrower process. The list under subsection (2) includes restricting the power of the education body and clarifies that where the education body has a different corporate form, it can also be intervened on to make the work required of the special administrator easier. We thought that the list in Clause 18 (2) was a bit narrow. This probing amendment is to explore that, and I look forward to hearing the Minister on this point.

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[Lord Nash]

My Lords, we have seen from our recent scrutiny of the Higher Education and Research Bill that it includes provisions to ensure that those undertaking higher education courses are able to continue their learning and are protected if their provider is unable to deliver their course—perhaps, but not solely as a result of it exiting the market; the noble Lord, Lord Stevenson, referred to that. Under these proposals the Office for Students will have the flexibility to require any provider on the register to have a student protection plan in place through conditions attached to its registration. We expect that the OfS will require all approved fee-capped providers, including FE colleges, if they are higher education providers, to have plans in place. In those FE colleges with students studying HE courses, the FE students will have the benefit of being protected by the special objective in the event of the college becoming insolvent and the body being placed in education administration. Measures within the provider’s student protection plan may also be relevant and could be brought into play.

I understand that noble Lords are concerned that FE colleges offering such provision will be subject to both regimes and that this will add to the cost of running HE provision. Whether to require FE bodies to have student protection plans in place will be a matter for the Office for Students to decide. However, I agree that where an FE body is insolvent and in special administration, it would make little sense for the education administrator to be required to implement the SPP at the same time as implementing the proposals to achieve the special objective, if possible, as those proposals will extend to the very students covered by the student protection plan.

Where the Secretary of State or Welsh Ministers have decided to place an FE college in special administration, the special objective should take precedence over SPPs. In seeking to achieve the special objective, the education administrator must avoid or minimise disruption to the studies of students of the FE body as a whole, regardless of the course they are studying. There may be circumstances in which the education administrator may find it helpful to refer to the measures within the plan to inform the proposals for a particular student or groups of students, but a student protection plan might impede the education administrator’s discretion about the best way to achieve the special objective. Where this is the case, the provisions of the Bill already allow the court to make an interim order that would suspend existing student protection plans where it considers that necessary or appropriate. I hope that I have been able to reassure the noble Lord that the proposed amendment is unnecessary and that he will withdraw it.

[Lord Stevenson of Balmacara]

I thank the Minister for his response. I am glad we agree on this. I thought for a moment he was going to give me a concession, which would have been unexpected for a very broad probing amendment. He did not, but he did say that there is a power in Bill. I have been unable to find it, so if he could write to me about that, I would be grateful. I beg leave to withdraw the amendment.

Amendment 41 withdrawn.

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Moved by

[Lord Stevenson of Balmacara]

47: Schedule 2, page 30, line 39, at end insert—
“3A The education administrator may not transfer assets of any further education body to a for-profit private company where he or she considers that more than half of the funding of the acquisition of the asset came from public funds.”

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[Lord Stevenson of Balmacara]

My Lords, I was hoping to have a short breather while we discussed other important matters, but unfortunately that has not happened. We move on to Amendment 47, which refers back to some of the issues that we have been dealing with regarding process, particularly what happens to assets. Clearly much of the work of the special administration scheme will be the ability to bring forward and, if necessary, sell—in other words, dispose of—assets that would otherwise not be there that could be used to repay the creditors, and I suppose might in part be used to maintain the operation of the college that is under liquidation.

To stand back a little from the issue, the interesting thing is that much of what we are trying to achieve in this special educational administration is more akin to the Chapter 11 processes in American bankruptcy law than to those here. We have the same basic elements: a court-driven procedure, the protection measure in place in order to make sure that the institution is kept as a going concern, and a commitment that is well expressed in terms of the special purposes of the education administrator to take it through. The question is whether or not that follows through all the way.

The amendment is probing, but it builds on one or two issues regarding which we want to get responses from the Minister on the record. In the first place, it would be helpful if we clarified that, as has been explained by the Ministers in their responses, this is unlikely to be a regular occurrence and will not be precipitated by the Bill, but it might happen and therefore we should walk through it and understand it. If we have a situation where a college is going insolvent, either the system can then operate on existing measures or the Secretary of State can apply for and obtain an order to establish the special administration, and then we are into the process that we have talked about at length and do not need to go back to.

However, it may arise that funds coming into the college to maintain it as a going concern are difficult to sustain. There may be changes in government policy or other changes in external funding that mean that it will not remain a going concern. So we are talking about maintaining the services and facilities for the students for as long as possible but in the certain knowledge that the institution is going to close down. At that point, I am sure it will be in the mind of the special administrator that some assets could be sold so that money could be obtained. Depending on the rules laid down for them, it would probably be rather difficult for that person not to engage with that possibility. However much we may wish to have the assets and the buildings maintained in case there is an uplift and the funds come back, the cruel reality of the situation will probably kick in and mean that the assets will be sold.

If the institution were a charity, as many of these bodies are, the question would not arise because, under charity law, charitable bodies holding assets are not allowed to dispose of them to third parties—in fact there is a prohibition that they must dispose of them to charities of similar nature and purpose so that the charitable purpose under which they were originally established may be maintained. I would be grateful if the Minister could confirm that that is the Government’s understanding of the issue. Where special systems or incorporation arrangements are in place, I assume that that will also apply, but charitable status is the main area here, so we are talking about a relatively small group of places where the natural process would be perhaps to squeeze the college down to a smaller area and get rid of buildings, equipment and so on.

The problem then arises that funding was almost certainly originally provided from local authorities but, since then, certainly from central government, so there is an investment issue about whether the funding that has been provided should not be better retained in the sector, even if it cannot be retained within the existing body as a going concern. So the amendment poses this question: in the relatively unlikely event of this happening where the college is not a charity, what happens to freeheld assets that could be disposed of where those assets were originally funded from the public purse? Is there not at least a moral obligation to ensure that they are retained within the sector? I beg to move.

[Lord Storey]

I have always been concerned when public money has been used to purchase a facility—let us say that it has been used to purchase an FE college and that FE college then sells off land, for example a playing field. That playing field may often have a dual use: perhaps the local community uses it for activities, for example, which is good for the FE college and for the local community. So when it sells it off, public money is being lost to that community.

As we said under the first group of amendments, the likelihood of insolvency is remote. With this amendment, I get the point that public money bought the facilities but, presumably, you could have local authorities—I have seen it quite often—saying, “We’ll have the facilities”, but then selling them off to the private sector to get that money in for other things for the community. Is that the point that the noble Lord is making?

[Lord Stevenson of Balmacara]

No, it is not actually—although that is a scary prospect. In my scenario, we are in a liquidation situation in which decisions have been reached that the college is going to decline, because it cannot be made secure. It has been superseded by the court order now in the hands of the special administrator, and a decision has to be made about what happens to the residue. That may take time, but at the end of the day there will be a blank wall and the car will hit it. At that point, what happens to those assets? It is not that they could not be sold for benefit—the noble Lord’s point about land is absolutely right. I think it is pretty unlikely, but there could be land associated with FE colleges that, if sold, could realise development potential which could pay off all the creditors, and that could be seen to be a good thing. But if that money was originally provided for the education—not for a charity, because that is protected—what is the right way to go forward?

[Lord Storey]

In that case, there is merit in considering the amendment.

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I hope that these protections make clear to noble Lords that this is not about the transfer of publicly funded assets to the private sector on the cheap or by way of windfall. It is rightly about putting in place an orderly process for dealing with the assets of an insolvent FE body so as to achieve the special objective of protecting students and the secondary objective of protecting creditors in the event of insolvency.

[Lord Stevenson of Balmacara]

My Lords, I thank the Minister for his helpful comments. I suspect that the most assured protection would be for the body concerned to be a charitable body. This would give total protection to the resources in the institution because it is not possible to make such a transfer under charitable law. That is not the situation if there are special measures. It is sufficiently clear that the primary purposes trump others—in so far as it is possible that the assets should be kept and used for further education. In these circumstances, I beg leave to withdraw the amendment.

Amendment 47 withdrawn.

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Moved by

[Lord Stevenson of Balmacara]

57: Clause 37, page 18, line 14, at end insert—
“( ) The Secretary of State must ensure that the list of disqualified officers is made publicly available.”

[Lord Stevenson of Balmacara]

I shall, rather sensibly, be brief because I am trying to amend a clause that I think will be deleted in the next group, so there is not much point in me trying to argue persuasively the merit of my case, although I certainly could. Since the point arises again in relation to the new Clause 37, if it is approved by the Committee, we may as well just cover it.

I do not think we are far apart on this. The question is more one of being clear about what is asked for and how it will be made available. The issue raised by the amendment is that where people are disqualified from holding office in the further education sector, there is a risk if their names are not made available because they could pop up in other colleges and might be subject to the same concerns. A list, which is quite common in other areas of insolvency, should be made available. It is not mentioned in the Bill or the new clause. When the Minister speaks, I may be advised that this will be dealt with in regulations. If so, I would be very happy at that stage to concede that this point is not required. I beg to move.

[Lord Nash]

I intend to go into the detail, which the noble Lord, Lord Stevenson, referred to, of the application of the Company Directors Disqualification Act 1986 to FE bodies when I speak to the amendment that I have tabled to amend Clause 37 by replacing it with a revised version. As we continue to refer to that Act, in this and the subsequent amendment, I propose that we use its acronym, the CDDA.

For consideration now is Amendment 57, which was tabled by the noble Lords, Lord Watson and Lord Hunt, which specifically provides that the Secretary of State must ensure that the list of disqualified officers is made publicly available. This amendment refers explicitly to disqualified officers, which we take to mean members—that is, governors—of an FE body who have been disqualified by the court having been found liable of wrongful or fraudulent trading under the Insolvency Act 1986, as applied to FE bodies that are statutory corporations by Clause 5, or of similar offences. Under Clause 5, the provisions in the Insolvency Act 1986 relating to wrongful and fraudulent trading will apply to governors and other individuals who run FE bodies in the same way as those provisions apply to directors of, and others involved in the running of, companies.

I understand noble Lords’ concerns and recognise the intent behind this amendment that a publicly searchable list of disqualified individuals should be maintained, so that it is apparent who should not be appointed as a governor of other FE bodies. However, there is already provision in the CDDA for a register of disqualification orders, which is to be open to inspection, to be kept by the Secretary of State. Therefore Clause 37, both as currently drafted and as we intend to amend it, already provides for the well-intended purpose that noble Lords are seeking to achieve. On this basis, I hope that the noble Lord will withdraw the amendment.

[Lord Stevenson of Balmacara]

I thank the Minister for his comments, which I fully accept. I beg leave to withdraw the amendment.

Amendment 57 withdrawn.

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[Lord Stevenson of Balmacara]

My Lords, we have an amendment in this group. I support the amendments proposed by the noble Baroness, Lady Garden, and the noble Earl, Lord Liverpool. They make a very good case for additional words in the Bill to reflect what is surely implied in much of what we have been discussing: the ability of this sector to turn out people with not only technical and apprenticeship skills but wider abilities in the pursuit of jobs and the support of UK plc.

Our amendment is based on an assumption that if all this information is going to be collected then it must be used for something and not simply stay in files in the department. It should be used to support the technical and FE sectors and make sure that people are aware of what work is being done there. The quality being provided and assured by this Bill will make a difference to what people might do and which careers they are going to have. One of the great complaints we hear is that so little is done to try to encourage people towards this sector where good and rewarding courses are on offer, out of which good and rewarding careers can be built. If that is not known, people will not apply, and we will perpetuate the problems we have had in the past. I look forward to hearing what the Minister has to say about these issues. We support the other two amendments in this group.

[Baroness Buscombe]

Amendment 59 is proposed by the noble Baroness, Lady Garden, and the noble Lord, Lord Storey. It is important that we have a comprehensive analysis of how the further education system is operating in England, including which learners are studying which courses. I agree with noble Lords that analysis of the quality—that is a word I do not think we have used this evening but which we used a lot in Monday in Committee on this Bill—of further education provision and information about learners, including diversity and their geographic circumstances, are important.

However, we believe that this amendment is not necessary. The clause already enables the Secretary of State to require such information if she chooses to do so. The clause rightly gives discretion to the Secretary of State about what information to require from provider organisations. That is the approach in the current legislation we are amending through this clause that underpins a national data system that is working well. The way we gather information is not broken and we are not trying to fix it. We already have the ability to require the information specified in this amendment and already do so. The purpose of this clause is simply to ensure that we can continue to perform a robust and comprehensive analysis of the operation of the further education system in England after responsibility for some aspects of it are transferred to certain combined authorities as part of the wider devolution deals the Government have agreed.

On Amendment 60, I entirely agree with the sentiments of the new clause that would require the Government to have regard to four important aspects of technical and further education. However, I do not believe that the amendment is necessary because they are all things already provided for in the legislation. The duty to,

“promote and support the technical and further education sectors”,

is at the very heart of the recommendations made by the noble Lord, Lord Sainsbury, in his review. In the skills plan we announced that we would streamline the technical education system by introducing a common framework of routes underpinned by occupational maps. New qualifications will be introduced that are driven by the needs of particular occupations and based on standards designed by employers and other relevant stakeholders. Many of the reforms will be taken forward by the Institute for Apprenticeships and Technical Education under amendments made in the Enterprise Act 2016 after Royal Assent which will come into effect from April this year. The reformed technical education system will be reliant on a strong network of colleges and other providers.

The Government’s area review process has supported a restructuring of the post-16 education and training sector and helped to create more financial stable and efficient providers as well as improved collaboration across the different types of institution. We have announced £170 million of capital funding for the institutes of technology to make sure that we have sufficient provision targeted at delivering high-quality technical education at higher skills levels that is tailored around the needs of local employers.

With regard to the duty to ensure high-quality apprenticeship programmes, the duty in paragraph (b) of the proposed clause is not necessary. The Government have already made a public commitment to ensure high-quality apprenticeship programmes. We will discharge this duty in a number of ways. The Government have accepted the recommendations of the Richard and Sainsbury reviews that will help ensure that the apprenticeships offered are of a high standard. As noble Lords are aware, the Institute for Apprenticeships and Technical Education—on course to be launched in April—will be an independent body, led by employers and others, which will assure the quality of apprenticeship standards and plans in England. Our apprenticeship reforms have introduced a higher bar through the end-point assessment. The holistic assessment of apprentices will give employers confidence that their apprentices are job-ready by requiring them to demonstrate full competence in their occupation in order to pass their end-point assessment.

The Government’s responsibility to ensure high-quality apprenticeships also extends to training. We are working closely with Ofsted, which has a statutory responsibility to inspect the apprenticeships that we fund. We have also created a new register of apprenticeship training providers, with an emphasis on quality. Those with an inadequate Ofsted rating are not eligible to apply. The Skills Funding Agency also ensures the quality of apprenticeship training through its minimum standards and intervention regime.

In paragraph 10 of our draft strategic guidance for the institute, we have made it clear that,

“we would expect the Institute to support employers to develop ambitious plans for good quality standards, not least in sectors where we have evidence of skills gaps and that are priorities for the industrial strategy”.

We have also made it clear that:

“Supporting greater social mobility is also a clear Government priority. Apprenticeships can play a key role in helping to deliver this, through ensuring that people from all backgrounds are able to progress”.


The next duty is to support the financial stability and good governance of further education bodies. Strong financial management and effective governing bodies are important priorities recognised across the college sector. Many governing bodies have made significant progress in ensuring that they have the relevant finance skills and expertise. A survey of governing bodies, carried out by the Association of Colleges in 2015, found that among independent governors, 17% had a professional background in finance, which was second only to those with a background in education. We know that some colleges still find it difficult to recruit governors with a financial background. This is why the Government are funding the newly launched inspiring governance service to help colleges, as well as schools, find people with the right skills to join their governing bodies. The Government are also supporting the Education and Training Foundation in developing a training programme for governors with an existing finance role.

Where colleges fail in their financial management through poor financial performance or control there is an intervention system in place which can include referral to the further education commissioner. The commissioner will assess the college and make specific recommendations for strengthening the governing body. The further education commissioner has set out lessons for strengthening governance in colleges through his termly letters to the sector.

Finally, the duty to support good-quality careers advice is contained in the proposed new clause. The Government are committed to ensuring that everyone has the appropriate advice and guidance to climb the ladder of opportunity and make the most of their talents. That is why we confirmed in the Building our Industrial Strategy Green Paper our intention to publish a comprehensive careers strategy for all ages later this year. The strategy will set out our plans to expand the quality and quantity of careers advice. We will make it easier for people to access the support they need to find a fulfilling route that is right for them, whether that is an academic or technical route or an apprenticeship.

I hope we can all agree that we share the same objectives and that I have provided sufficient reassurance about the steps that the Government are already taking to support these objectives. I therefore hope that noble Lords will not feel inclined to move Amendment 60.

I move to Amendment 62 in the name of my noble friend Lord Liverpool and the noble Baroness, Lady Garden. As set out in the Post-16 Skills Plan, the Government’s ambition is to ensure that we have young people and adults with the skills, knowledge and behaviours that better equip them for employment in the 21st century. The effect of this amendment will be to prescribe that those skills, knowledge and behaviours include soft skills. I fully understand why my noble friend has put forward this amendment, and I agree that these skills are of paramount importance. The Government are committed to ensuring that everyone has the appropriate advice to climb the ladder of opportunity and make the most of their talents, but that will not happen without these soft skills. I fully understand why my noble friend has put forward these skills, but I am not convinced that placing an express duty on the institute is the most effective way to address them.

One of the fundamental principles of the new technical education reforms will be that employers, supported by education experts, will set the standards required for specific occupations to allow them to shape the content to give students the skills, knowledge and behaviours that employers require. It will be up to employers and relevant stakeholders to determine which soft skills are required for each occupation. That said, I recognise that soft skills will be important to ensure that individuals gain the key employability and occupational skills to get them ready for the workplace, and we are already putting in place measures to encourage this. For example, the Government continue to support schools to offer a broad and balanced curriculum.

We expect all schools to offer their pupils a rigorous curriculum that is supported by activities to develop the soft skills that prepare them for success in modern Britain. For example, extracurricular activities offered by many schools help pupils develop various soft skills such as resilience, leadership, teamwork, and social and emotional skills before they leave school at the age of 16. In 2015-16, the Government invested £5 million in character education to fund grants to organisations and schools to test new approaches and to expand existing programmes, new activity to build the evidence base and the first round of character awards to celebrate those schools and organisations leading the way in developing soft skills in young people. In addition, these core employability skills could be developed through a high-quality, substantial work placement which every 16 to 19 year-old student will undertake as part of the new technical education courses.

I take on board what my noble friend has said in referring to the report, which he and I contributed to, by that EU Sub-Committee which talked about the real importance of those basic skills. One of the key words that my noble friend used was “confidence”. Confidence, communication and self-esteem are absolutely fundamental. You can have all the skills in the world, whether they are academic, technical, or whatever, but if you do not have the ability to communicate and present and accept that as an employee you will often be the first contact with that company—your employer—then it is very difficult for you to climb that ladder of opportunity.

In view of this, we will reflect on current approaches and determine what more we can do to support schools and colleges in this area. I hope that the noble Baroness will feel reassured enough to withdraw her amendment.

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[Baroness Garden of Frognal]

My Lords, this is a probing amendment because I am well aware that issues of VAT are somewhat outside the scope of the Department for Education. However, it is an issue that keeps recurring and it does no harm to raise it again occasionally. The purpose is to equalise the arrangement for VAT refunds between schools and colleges. Currently, colleges, schools and academies are all required to pay VAT on their purchases but schools are subsequently reimbursed for these costs. The Sixth Form Colleges Association argues that:

“The Government’s historic defence for the absence of a VAT refund scheme for … Colleges has been that the VAT costs of … Colleges are taken into account as part of their up-front funding allocation. But with the introduction of the new 16-19 funding formula, all 16-19 providers (including school and academy sixth forms, free schools and … Colleges) are now funded in the same way, using the same methodology. We welcome the steps that have been taken to equalise the funding arrangements … Yet schools, academies and free schools continue to benefit from a mechanism to recover their VAT costs, while …Colleges do not”.


A recent survey indicated that the average college pays some £300,000 a year in VAT. This is obviously a significant amount being taken away from the front-line education of students in a way that is not comparable in schools and academies. Apparently, it would cost around £31 million each year to refund the VAT costs of colleges—but perhaps I should not have mentioned that.

The parliamentary Library briefing on the funding of 16-19 education indicates some key points. In 2010, the Government made a commitment to “fairer post-16 funding”—closing the funding gap between 16-19 education in schools and that in colleges. This was set out in a White Paper called The Importance of Teaching. However, the Government do not seem to have followed this up. There was a ray of hope in an Answer given by David Cameron when he was Prime Minister to a Question from Ian Swales who was then the Liberal Democrat MP for Redcar—those happy days. He asked why colleges had to pay VAT while schools and academies did not. The Prime Minister replied that he would look carefully at what had been raised, particularly in respect of free school meals for sixth form colleges and for secondary schools. He added that it was very welcome that children in infant schools would not have to pay for school meals. He then said:

“I will look carefully at his point about VAT”.—[Official Report, Commons, 9/10/13; col. 158.]


However, looking carefully did not seem to mean that much happened afterwards.

This seems to be an anomaly which could and should be rectified. It would bring considerable benefit to the education of young people and adults in further education bodies, be they sixth form colleges or further education colleges. I raise it again just to see whether there is a more positive response from the Minister. I beg to move.

[Lord Stevenson of Balmacara]

My Lords, I support the amendment; it is a probing amendment in a complex area. Of course the matter is not in the hands of the Minister who is due to respond to it, because it is a matter that is jealously guarded by the Chancellor of the Exchequer, who after all is responsible for tax receipts. In my experience, the issue is very complicated, not least because of history and practice. There may be a strand of European ideology built into this as well, which may reach a conclusion in a couple of years’ time—or not, as the case may be.

The basic principles of the VAT system are very straightforward: a trading operation has to trade with the full weight of VAT on it, and expenditure on it is recouped against subsequent users and from those who purchase the goods and services provided. Those things that are not deemed to be trading do not attract VAT, but equally they cannot be redeemed against the VAT that has been incurred in the purchase and preparation of them.

As the noble Baroness, Lady Garden, said, those bodies exposed to the full weight of VAT on their non-trading activities suffer a 20% penalty for the work that they are doing, and that is money that could be properly reinvested. That is a sound case and I am sure it has exercised Ministers before. I look forward to hearing the response.

[Lord Nash]

I thank noble Lords for this amendment, which calls for a change in tax policy. It seeks to allow FE colleges to claim refunds of VAT incurred on their non-business expenditure. As noble Lords have acknowledged, tax policy is a matter for the Chancellor and the Treasury. Any tax changes are considered by the Chancellor in the normal way and announced in the context of his Budget judgment, as he will be doing next week.

I understand this call for additional funds from the Treasury for FE, but there are clear implications when thinking about such a change. It is estimated that it would cost the Exchequer about £145 million per year. That cost would have to be covered somewhere in the economy—for example, reducing public expenditure on other government priorities. In addition, the VAT treatment of FE colleges is no different from many other public bodies.

However, in view of all that the noble Baroness said about the previous Prime Minister’s comments about looking carefully at the matter, I will go back to see what further I can say by way of explanation for the status quo. I hope that in view of my comments, she will feel able to withdraw her amendment.

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[Baroness Cohen of Pimlico]

I support the amendment. I am new to the business of voluntary governorship in state-funded institutions. I have been fortunate for most of my working life to have been in organisations that had admirable company secretaries, who had the equally difficult task of standing up to chairmen and chief executives—but these were well-trained, qualified and well-paid people. The problem in all education is, of course, that anything that is not a teacher reads like an unmerited overhead.

I am not quite certain what I should propose as a remedy, but this point is key. Many of the messes that schools and further education institutions get into have to do with governance, and that has to do with a clerk who is not actually qualified and probably not properly paid.

[Lord Stevenson of Balmacara]

I hesitate to speak because I can see that a Division is pending and it would be nice for us to be able to finish at just the right point, but I realised when my noble friend was speaking that I was that clerk. In an earlier career, I was the clerk of an FE college. The spectre of the buccaneering principals who were around in FE at that time came crowding back, and I felt I ought to share that with the Committee. The problem was that these institutions were very often the creatures of the local authority that owned and fronted them, and there were pressures at play. The principal wanted to be the person who was the main conduit to the local authority and would not brook any interference. Absent the principal, the company secretary, who was indeed a demon of great skill and ability to maintain her position in the structure, took over and ran the place very adequately. But with the growth of corporate structures and, now, the whole question of how that must be used to mature and operate organisations of some scale and scope, I would have thought there must be a way of ensuring that, when corporate structures such as companies are established, there has to be a company secretary, and that company secretary must fulfil at least the minimum standards required of those who operate in the private sector. So there may be a way forward.

I agree entirely with what my noble friend said: the pressure to keep those who are academics—and who should be academics—away from trying to do things that they are patently unable to do, just because they happen to occupy the position of principal or vice-principal, has been an enduring theme with those who have worked in the education sector at FE and HE level. It is only recently that appropriately qualified and suitably remunerated members of that profession have been operating in the way that they should. I support the amendment.

[Lord Nash]

My Lords, I recognise the very important role played by clerks as expert advisers to governing bodies of further education institutions, and I pay tribute to the contribution by clerks and governing bodies up and down the country. As the responsibilities of those bodies increase, we must also support the development of the capability and professionalism among clerks. As the Minister responsible for governors in schools, I can completely see the importance of this matter. That is why we support the Education and Training Foundation in the delivery of a new professional development programme for clerks to be rolled out this year. Sector representative bodies also deliver a range of activities to support clerks, including a very active clerks’ network and best-practice materials. The ETF is also supporting the increased professionalism of clerks through the improving clerk to company secretary programme to take account in changing college structures and clerks’ responsibilities, whereby clerks can attain company secretary qualifications. We are supporting chairs of boards of governors through the national leaders of governance programme, where experienced chairs mentor others who need support.

There is a well-established statutory requirement for the instrument of an FE institution to make provision for there to be a clerk, and for provision for the responsibilities of that role to be set out in the instrument. That is set out in Schedule 4 to the Further and Higher Education Act 1992. This means that the importance of the clerk’s role, which I know is recognised by members of this House, is also reflected in law.

While further statutory prescription in relation to duties and responsibilities of the clerk may appear attractive, I do not believe that it is the right approach in this case. I will elaborate. The amendment proposes a few high-level matters relating to advice that clerks should provide and, as proposed, overlooks certain features that would reasonably be expected to be an important part of any clerk’s role. These include, for example, independence from the senior management team at the institution and a duty to take appropriate action if the board, the chair or one of the committees appears to be at risk of acting outside their powers or to be proposing actions that may be unlawful.

The 1992 Act sets up high-level requirements for the instrument and articles, including a requirement for there to be a clerk and for the clerk’s responsibilities to be set out in the instrument. Since 2011, colleges have not required the consent of the Secretary of State to amend their instruments. The detailed content of the instrument, including the details of the responsibilities of the clerk, now largely rests with the governing body of the FE corporation rather than with Ministers.

In my view, the existing balance between the requirements set out in legislation and the responsibilities of the governing body is the right one. We should be very careful about removing from colleges the necessary flexibility that enables governing bodies to adapt and tailor their governance arrangements to fit the circumstances of their institution. That is particularly important in a sector as varied as further education. It is obviously important to guard against the possibility that greater prescription has the unintended effect of undermining the responsibility and thus the accountability of governing bodies. The careful balance set out in the current legislation in relation to matters of governance, including in respect of the role of the clerk, remains important going forward.

Principals do not appoint board members. Governors are appointed to the board by the board itself. A good principal will have a strong interest in having a capable body. When there is a material pre-existing relationship between the principal and a member of the board, it should be declared as part of the appointment process. The Association of Colleges’ model job description states that the clerk should be independent of the senior management team and should provide unbiased advice.

We do not think this amendment would add materially to the conduct of clerking or to governing bodies of FE colleges. We believe clerking is generally working well, and the quality of clerking has undoubtedly improved significantly in recent years. However, as I have spent part of the last four years attempting, I think with some success, to raise the importance and effectiveness of governance in schools, and in view of what noble Lords have said, I will go back and investigate their concerns and see what more we might be able to do in this regard, because it is important. Legislation may be a very blunt instrument, but I will go back to look at it further.