Higher Education Funding

Lord Trees Excerpts

Thursday 12th September 2024 Lords Chamber

[Lord Trees (CB)]

My Lords, I thank the noble Lord, Lord Krebs, for securing this important debate.

There are two major problems converging now on the higher education sector: first, a level of underfunding, with an estimated 40% of institutions likely to be running a budget deficit this year and, secondly, an eye-watering amount of accumulating student debt, which in England alone is approaching £236 billion. It is increasing exponentially and much of it will be unpaid. There is no doubt that our best universities are world-class and a jewel in the UK’s crown, and our objective should be to ensure their financial sustainability. However, I question if we need all the universities that exist.

The seeds of this crisis lie in the policy of the then Prime Minister Tony Blair in 1999 to have 50% of 18 to 30 year-olds attend university. Following this, the number of UK higher education institutions rose by 45%—according to the numbers I have been able to get—up to 2021, with, sadly, an attendant fall in further education colleges by 40% over the same period.

The introduction of fees paid by students was meant to introduce market choice, but virtually all institutions that became universities have charged the maximum fee, irrespective of the quality of programmes offered, and many young people have been encouraged to pursue expensive degree programmes of questionable worth. The Augar report in 2019 concluded that too many students were being recruited to poor-value higher education courses, with both poor graduate retention and poor graduate outcomes. Many students may have been better served by vocational programmes preparing for employment and a defined career path.

In expanding the numbers of universities and university students, we have reduced their unit of resource, such that we are not now properly funding those quality institutions providing the academically and technically demanding qualifications that we need in certain key sectors. At the same time we are underfunding the FE sector, which provides the skills training we are desperately short of.

An example in the HE sector with which I am familiar is veterinary education. Our UK vet schools are world-class, with five in the global top 20. The funding for a veterinary degree programme is about £20,000 per student per year, but the estimated true cost to provide that education is £25,000. To compensate for this shortfall, many vet schools are admitting substantial numbers of overseas students, who pay £30,000 to 40,000 a year in fees. Currently, over 20% of our veterinary graduates from UK vet schools are overseas students who are less likely to work in the UK, yet we are desperately short of vets.

This pattern is repeated in many other degree programmes that provide high-quality graduates urgently needed for our strategic sectors, and direct government support for these programmes needs to be adequate. I am not sure whether increasing top-up fees can be the solution, because presumably that will mean increasing student borrowing and further escalating the massive total of student debt. At the same time, greater investment in more vocational college and work-based programmes, including apprenticeships, will help provide the skills training we need so desperately.

I suggest that we are currently failing the country’s needs and the capabilities of our young people throughout the spectrum of tertiary education. Let us focus the finite resources we have in an evidence-based way to address the strategic needs for our economic and intellectual development.