Higher Education Funding

Debate between Lord Willetts and Adrian Bailey

Thursday 8th January 2015 Commons Chamber

[Mr Bailey]

I agree with my right hon. Friend. Indeed, the report’s recommendations underline that point. It is significant in another way, too: it was a tacit recognition by the Chancellor that if he were to expand the number of places, extra money would have to come from somewhere, and that that was not being provided for in the then current Budget projections. It is still unclear exactly how the escalating cost—it could well rise to considerably more than 30,000 students if the cap were removed completely—will be dealt with by the Government.

[Mr David Willetts (Havant) (Con)]

The hon. Gentleman talks about costs, budgets and public spending. In the interests of having a clear debate, will he confirm that the resource accounting and budgeting charge is not an item of public expending, as it appears in the national budget or the national accounts?

[Mr Bailey]

I understand the question, because I have heard the former Minister’s, shall we say, robust prosecution of this particular argument before. May I make an admission? I am not an accountant. All I do is go by what the authoritative bodies say. If the right hon. Gentleman wishes to argue with them that is fine, but I think most people would say it is a matter of common sense that if we lend so much money and get only so much back, sooner or later that particular default rate will have to be incorporated in national accounts and people will have to pay for it.

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[Mr Willetts]

The only country that has a system like ours is Australia. The last time I was in Australia, comparing notes and discussing our two systems, when I asked the leading Australian expert what the Australian equivalent of the RAB charge was, he said, “I think when we launched the scheme five years ago, we did an estimate of write-offs, and come to think of it, we probably ought to have another look at it now.” The idea that every six months a new figure was churned out essentially based on what has happened to earnings in the previous six months compared with the OBR forecast in 2011 would have been regarded as absurd. I would happily have a much more credible set of assessments of write-offs, which would have to allow for the fact that this must be a flexible system.

Returning to the shadow Minister’s intervention, I accept that all of us in all parts of the House should openly recognise that the scheme will not remain unchanged until 2046. We do not sit around with our income tax system, saying, “Well, of course Geoffrey Howe decided income tax rates and thresholds in 1980, and now that 35 years have elapsed we can decide on a new set.” That is not how policy is conducted in this country. One of the reasons why I am unhappy with this focus on a particular way of calculating the RAB charge is that it brings with it a set of assumptions which, unlike any other area of public policy, have been determined until 2046, so the only thing to do if someone wanted to change it is to tear the whole system up and start again.

I completely accept that there will be a necessity—I am interested in this and I am doing something on it at present—for us to discuss the right balance of public and private benefit from higher education and the balance of public and private contribution to the costs of higher education. The graduate repayments must clearly reflect the private benefit from higher education, but nobody should be preoccupied with a set of calculations that are possible only because of some highly precise assumptions that bear no relationship to the real world of higher education over the next 30 years.

[Mr Bailey]

I have been listening to the right hon. Gentleman with great interest. It seems to me that part of the case for a review is that, when the scheme was introduced, the Government based it on certain assumptions about RAB charges that have subsequently proved to be incredibly inaccurate. That may at some time in the future result in a need at least to amend policy. Given that the scheme has been in effect since 2012 and these inaccuracies have been exposed, is not this the most appropriate time to review it to see what changes should be made?

[Mr Willetts]

On inaccuracies, the RAB charge is largely determined by external factors. The 2.2% cost of borrowing is determined by Treasury assumption. The repayment threshold in 2016 relative to earnings is entirely determined by OBR forecasts. We did not go round trying to reach an alternative wages forecast; we just took the OBR forecast, which was the only sensible way to proceed. Then the British jobs market performed differently from what everyone expected in 2010, with good news on employment and less good news on increases in the real value of wages.

There was an error. The error that was made, which emerges from increased research on what has happened to graduates, is that it looks as though graduate earnings do not bounce around as much as was expected. That is another factor, although not a significant one in how the RAB charge is forecast. The forecast is inevitably shaped by the kind of assumptions that I described earlier.

I have spoken for 20 minutes and I do not want to go on any longer. I have touched on my concern about the way this debate is going wrong. It is going wrong by treating the assumptions necessary to make any kind of RAB charge calculations as somehow fixing the design of the system for the next 30 years, when that is absolutely not the purpose of the specification of those assumptions to make the calculation.

Oral Answers to Questions

Debate between Lord Willetts and Adrian Bailey

Thursday 26th June 2014 Commons Chamber

[Mr Speaker]

The hon. Gentleman and the Minister appear to have a symbiotic relationship, and we are grateful for that, I am sure.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

Despite all the praiseworthy emphasis that the Government have placed on increasing the number of apprentices, the number of apprenticeship starts in the under-19 age group is dropping. The BIS Committee recommended that the Government should use public procurement to increase those numbers, as a lot of local authorities do. Why have the Government not done it?

[Mr Willetts]

The Government believe in promoting apprenticeships across the public sector. Figures published today show an increase in the number of apprenticeships in that crucial age group.

Oral Answers to Questions

Debate between Lord Willetts and Adrian Bailey

Thursday 13th June 2013 Commons Chamber

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

What assessment has the Minister made of the take-up of post-24 advanced learning loans and the potential impact on further education colleges’ finances?

[Mr Willetts]

We are absolutely committed to ensuring that such loans are taken up. We are very much looking forward to ensuring that they help to spread training opportunities for adult learning, to which we have a clear commitment.

Higher Education White Paper

Debate between Lord Willetts and Adrian Bailey

Tuesday 28th June 2011 Commons Chamber

[Mr Willetts]

My hon. Friend is absolutely right. We believe that a more diverse sector with a greater range of institutions offers the greatest opportunity for students with a range of requirements to find the form of higher education that best suits them.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

This White Paper was originally scheduled for January. I understand that one reason for the six-month delay was No. 10’s concern to ensure that it did not herald a repeat of the NHS reform fiasco. What guarantees can the Minister provide that in “widening participation” and bringing in more of the private sector, we do not have a repeat of the any-willing-provider fiasco?

[Mr Willetts]

OFFA is considering proposals from universities to improve access to their institutions, which is what they will have to do if they wish to charge fees above £6,000. The conclusions will be announced in the next fortnight, and I very much hope and am confident that they will show how it is possible to deliver wider access while maintaining high academic standards.

Off-quota University Places

Debate between Lord Willetts and Adrian Bailey

Tuesday 10th May 2011 Commons Chamber

[Mr Willetts]

I can absolutely give my hon. Friend the assurance that he seeks. The challenge to Labour Members is to join us in explaining to young people in schools and colleges across the country that none of them will have to pay up front to go to university. Under our proposals, the threshold for repayment is increased from the £15,000 we inherited from Labour to £21,000 now.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

Will the Minister tell the House what discussions he has had with the Office for Fair Access on this policy?

[Mr Willetts]

Consultation on our proposals will take place after we publish the White Paper. In a speech that I gave to Universities UK and in the speech that I quoted by my right hon. Friend the Secretary of State to HEFCE, we made it clear publicly that this is the option we are looking at.

Oral Answers to Questions

Debate between Lord Willetts and Adrian Bailey

Thursday 13th January 2011 Commons Chamber

[Mr Willetts]

My hon. Friend is absolutely right to say that that problem needs to be tackled at all stages of the educational process, in early years, at school and at university. I am pleased to inform the House today of a new initiative, an excellent collaboration between KPMG and the university of Durham, whereby school leavers will go straight into employment with KPMG while also studying at the university, with their fees paid by KPMG. That is an excellent example of the type of initiative that we want to see.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

What assessment has the Minister made of the disconnect between the cuts in higher education funding, particularly in the arts and humanities, and the delayed implementation of the education White Paper, which contains the new funding arrangements? Universities will have cuts before they get the new funding arrangements following that White Paper.

[Mr Willetts]

As I said earlier, it was clear in the grant letter that we sent to the Higher Education Funding Council for England that over the next few years, as the teaching grant income of universities falls, there will be increased income through the graduate contribution scheme. We believe that by the end of this Parliament, universities could well have a higher total income than they have at the moment.

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[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

The cuts in higher education funding will begin at the beginning of the next financial year, in April 2011. The university year will not end until the summer, and the new income streams from tuition fees will not arrive until some indeterminate time in the future. There is a disconnection in the cash flow to higher education. What is the Minister doing to prevent it from damaging higher education?

[The Minister for Universities and Science (Mr David Willetts)]

As I explained earlier, we are of course providing an alternative source of income for universities as graduate contributions come in. There will be a reduction in the teaching grant in the coming year, just as there will be public expenditure savings across many Departments, but universities will be able to go through that period, and we expect that at the end of the current Parliament, they will have a higher total income than they have at present.

Oral Answers to Questions

Debate between Lord Willetts and Adrian Bailey

Thursday 18th November 2010 Commons Chamber

[Mr Willetts]

I think I read an interesting article about that important initiative in Times Higher Education the other day. I congratulate my hon. Friend on drawing the House’s attention to it.

We are committed to broadening participation in higher education. That is what our £150 million scholarship scheme is all about, and initiatives such as the one described by my hon. Friend are very valuable.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

15. What assessment he has made of the effects of the abolition of regional development agencies on access to unspent funding from the European regional development fund.

Higher Education Funding

Debate between Lord Willetts and Adrian Bailey

Wednesday 3rd November 2010 Commons Chamber

[Mr Willetts]

I am grateful to my hon. Friend. He is right, and I know that he was a lecturer in an FE college before. The opportunity for the delivery of more higher education in FE colleges is an example of one of the many freedoms that we are trying to introduce.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

The Minister has rightly emphasised measures taken to improve access for low-income students. In my constituency, West Bromwich West, the education maintenance allowance, coupled with the Aimhigher project, have made significant improvements in the take-up of university places by lower-income students. Can the Minister guarantee that whatever steps are taken to replace those—if indeed they are replaced—the level of Government funding under the previous Government will be maintained?

Industry (Government Support)

Debate between Lord Willetts and Adrian Bailey

Wednesday 16th June 2010 Commons Chamber

[Mr Willetts]

I have very little time.

Many Labour Members referred particularly to regional issues, and I have to say to them that of course we understand the concern about regional imbalances in our economy. In fact, another measure that deteriorated over the past 10 years has been the gap in GDP between different regions of our economy. If we are to tackle the problem of regional imbalances, we have to look objectively at the performance of regional development agencies. The report from the National Audit Office, published in March this year, made it clear that the NAO was

“unable to conclude that the regional wealth benefits actually generated”

by RDAs

“were as much as they could and should have been, and are therefore value for money.”

The report went on to refer to “weaknesses”, which

“in many cases, undermined the RDAs’ ability to make decisions and set priorities to maximise regional economic wealth”.

It concluded that RDAs were simply not doing the job they were supposed to do. That is why Government Members believe that RDA boundaries do not reflect functional economic areas; we wish to enable local enterprise partnerships to reflect better the natural economic geography of the areas that they serve. We are committed to replacing RDAs with local enterprise partnerships and we will invite local groups of councils and business leaders to come together to consider how they wish to form local enterprise partnerships.

[Mr Bailey]

rose—

[Mr Willetts]

I will give way to the Chairman of the Select Committee.

[Mr Bailey]

Will the right hon. Gentleman answer the query I posed in my contribution and tell us whether the money hitherto allocated to RDAs will follow through to the local economic partnerships?

[Mr Willetts]

We do believe that there are efficiencies to be made because of the very high overhead costs of RDAs. Government Members are committed to saving public money, and I have to say that one way in which we will do so is by saving money in the overhead costs of RDAs as we move to the new arrangements—and we make no apology for that.

We also believe that some roles currently carried out by RDAs can be scrapped to save money—regional spatial strategies, for example. We simply do not need them—full stop. There are other roles, including inward investment, that we believe should be led nationally and can be carried out elsewhere. We heard powerful examples from several of my hon. Friends of how individual RDAs were spending money around the world on regional offices; this type of function is better done at the national level. We believe that some RDA roles in sector leadership and taking responsibility for business support and innovation can also best be done nationally. That is the approach that we will take.

Our challenge is to rebalance the economy, to rebalance it in favour of manufacturing, to rebalance it in favour of investment and to rebalance it regionally as well. That is part of the inheritance that we take on from the previous Government.