Higher Education: Affordability and Quality

Lord Willetts Excerpts

Thursday 2nd July 2026 Lords Chamber

[Lord Willetts (Con)]

My Lords, I congratulate the noble Baroness, Lady Deech, on calling the debate. I declare my interest as a visiting professor at King’s College London and as a director of Thames Holdings. It would be in the spirit of an education debate to have some set texts. I have two set texts, although I am afraid that they are rather heavily oriented to economics. I should therefore apologise straightaway to the noble Baroness, because she made some very important points.

I am thinking of the Policy Exchange paper for which the noble Baroness wrote the foreword, as well as the very recent report from the Institute for Fiscal Studies on graduate earnings. It is worth focusing on these two documents, because they have very different accounts of what is going on. In the words of the Policy Exchange paper,

“the graduate … premium has plummeted”.

Those are its words and that is a widespread narrative in the media.

The IFS finds no such effect. In its words,

“average net returns … are large”—

and by “large” it means really large. After discounting lifetime earnings at a rate of inflation plus 3%--which is a very high rate that people object to when it is applied to student loans, but the IFS applies it to earnings—you find it is £290,000 extra earnings for a woman and £370,000 of extra earnings for a man over their lives. After you then allow for tax and loan repayments and make some rather heroic calculations about the counterfactual—what someone like that would have achieved by earnings had they not gone to university—even after all those deductions and the very high discount rate, you get a £90,000 gain for women and a £109,000 gain for men. The Government gain too. They are a net beneficiary through the repayments of loans and through the higher taxes paid by people with higher earnings, of £48,000 for women and £107,000 for men.

Unless there is to be a challenge on a comparable methodology—I have to say that the Policy Exchange methodology is not comparable; it takes the national living wage at an hourly rate, multiplies it by 40 in 2026 and compares it with graduate earnings in 2022, including part-time earnings—I think we have to take the IFS assessment as the authoritative assessment unless there is overwhelming evidence to the contrary.

This matters for the policy debate. The noble Baroness, Lady Deech, expressed concern about people with lower qualifications going to university. The IFS has looked at the outcomes for the 30% of students with the lowest prior attainment, and 85% of women and 60% of men are better off as a result of going to university. The evidence, not just in Britain but in other advanced western countries, is that if you take the marginal students—the people who just got in and who have particularly low attainments—and compare them with people just like them who did not go to university, you find a significant benefit from going into university.

However, behind this—behind these averages—on the IFS figures, after all the allowances, there are indeed 20% of men and 30% of women who are worse off, and they are concentrated in the performing arts and languages. That is why I, as the Minister, personally fought long and hard to make this evidence available and to get HMRC to agree that it would make its evidence available so it could be linked with educational data and these calculations would be possible.

However, I occasionally feel like the sorcerer’s apprentice at what has been unleashed, because the noble Baroness is right. This is useful information, it is the kind of information that prospective students should have, and indeed, the IFS research shows it is having an effect: a decline in participation in some of those courses, and an increase in participation in, say, STEM courses, which do better on these earnings measures. But that is supposed to be a useful tool; it should not be the be-all and end-all of the debate about higher education, because then the higher education debate looks appallingly different from at all other stages. On schools, we talk about teaching quality. The only thing we seem to be able to talk about and regard as a measure of quality is earnings, whereas the noble Baroness is right: there is more to higher education than that.

Nevertheless, it is the case that both the Government and the Opposition want to use this evidence to decide which departments, courses and universities they should close. So, they owe us an account of exactly how they are going to use this data, how they are going to interpret it, and what decisions are going to be taken.

For a start, the Government have said that they want fewer people to go on these courses and more to go on apprenticeships. As a minimum, analysis along the lines of that from the IFS should surely also be applied to apprenticeships. We need to compare like with like and, although there are some useful assessments of apprenticeships, they do not have anything like the rigour of this IFS analysis. Will the Minister commit today to apply this analysis to other forms of education and training as well?

Can we also know exactly how granular the information is? The IFS material is not the basis for deciding on an individual course at an individual university. Is that to happen and, if so, on the basis of what information? How up to date will that information be? There is a real dilemma here: the evidence in the IFS assessment is for people who did their GCSEs in the year 2002; is that to be the basis of a decision? If the students are more recent, how can we effectively forecast their lifelong earnings? There are important questions here and I very much look forward to the Minister’s reply, when I hope she addresses them.