(7 years, 4 months ago)
Lords ChamberMy Lords, we on these Benches support the case put so eloquently by the noble Lord, Lord Stevenson, and we much regret that he is stepping down from his Front-Bench role. We seem to have had to work together a lot in recent days, and it has always been a great pleasure to do so.
This increase in tuition fees is a significant further step towards full marketisation of the UK higher education sector, which threatens the accessibility and reputation of this vital sector. Allowing some universities with higher teaching ratings to charge higher fees means that students will increasingly have to weigh the opportunity presented by a particular course against the fee being charged. In fact, such a step could simply encourage the development of a two-tier university system whereby richer students go to higher-rated universities while the most disadvantaged students go to the lower-rated universities or not at all.
We on these Benches totally reject the idea of linking fees to teaching excellence framework gradings, as the noble Lord, Lord Stevenson, set out. They are an untried and untested form of assessment which should not be used to determine fees. There appears to be no correlation between increased fees and improved teaching quality. The National Union of Students points out that:
“Since tuition fees were trebled in 2012, there is no evidence to suggest that there was a consequential improvement in teaching quality. There has been no change in student satisfaction with the teaching on their course, while institutions have instead been shown to spend additional income from the fees rise on increased marketing materials, rather than on efforts to improve course quality”.
Doubtless some universities have used the fees to improve quality, but there is no guarantee that that is what the fees are there to do.
We have argued for many years that there is a serious lack of attention to teaching quality in universities. The emphasis has been heavily weighted to research for prestige, funding and career promotions, and we welcome the aims in the Higher Education and Research Bill to redress the balance, but we do not believe the way to solve this is through linking teaching quality to fees.
These changes come on top of other deeply damaging changes to student finance. First, there was the abolition of maintenance grants for lower-income students, which makes these regulations all the more damaging. Getting rid of grants while increasing the cost of university education may put lower-income students off attending higher-performing universities. Secondly, the retrospective change in loan conditions to freeze the repayment threshold for tuition fees at £21,000 breaks the deal done with students by the coalition and changes the terms for many students, meaning paying back from a lower starting point.
These measures will in no way encourage diversity or open access to mature or part-time students, nor encourage lifelong learning. We acknowledge the welcome increase to £833 million for the Director of Fair Access to improve student success for the more disadvantaged, but that is not going to solve the problem. Social mobility is simply not good enough. These measures will do nothing to improve opportunities for those from disadvantaged backgrounds. We join in the regrets.
My Lords, I declare my interests as a visiting professor at King’s College London, an adviser to 2U and an honorary fellow of Nuffield College, Oxford. I am discovering that this debate is a kind of valedictory for the noble Lord, Lord Stevenson. I would like to say how much I have enjoyed his interventions from the Front Bench during the debates we have both participated in. I am sure he will continue to contribute to this House; we need his contributions, and I have greatly appreciated what he has done.
It is rather peculiar that on this valedictory we are having a debate about these measures, when of course the truth is that the structure of higher education finance we are considering is one that all three parties have introduced during their times in government. If there is any example of a shared consensus on how to finance higher education, it is the Blair/coalition Government proposals for fees and loans. It is now a stable system, and one that all three parties have contributed to and should support.
It is of course not a system of up-front payment; that is its crucial feature. It is a graduate repayment scheme. When graduates repay, at a rate of 9% on earnings above £21,000, it is nothing like having a commercial debt. If a child of mine left university with £25,000 on their credit card or an overdraft of £50,000, I would be extremely worried as a parent. However, knowing that during their working lives they were going to pay back 9% of their earnings above £21,000, and that they would do so only if they were earning more, and if for whatever reason they were earning less they would not have to—in other words, they would be paying through PAYE—would not cause me concern.
Far more importantly, it does not concern students, which is why we have seen steady increases in the numbers of young people going to university as the successive changes have been brought about. Those changes have led to a growth in the number of places, particularly at universities that students have been choosing. We have indeed begun to see growth and shrinkage between different universities, reflecting student choice. We have seen more undergraduates getting their first choice of university. We have seen more places at university in total; indeed, these reforms made it possible to remove the cap on student numbers.
The increase in the number of university places has been particularly beneficial to students from lower-income backgrounds—the marginal students who are not otherwise getting in. Indeed, we have seen a surge in the number of people going to university from low-income backgrounds. At the beginning of this process, nearly 10 years ago when the Blair changes were first brought in and my party opposed them—with exactly the argument that we have been hearing again today: that they would put off low-income students—10% of students from the poorest backgrounds were going to university. After 10 years of these changes, 20% of students from the poorest backgrounds are going to university. That is not good enough—it is still way behind the 60% of young people from the most affluent backgrounds going to university—nevertheless, it is a doubling. We are on a journey in which we are gradually improving social mobility, with more young people from low-income backgrounds having this opportunity.
So the evidence is that they are not, to quote the noble Lord, Lord Stevenson, “debt-averse”, for the reason that it is not debt. I love the noble Lord’s example of his time at university. When he left, I suspect—because we are roughly contemporary—that he was facing an income tax rate of 35%. Now graduates face an income tax rate of 29% above a very high threshold. If he was not income tax-averse to going to university, why should they be income tax-averse now if they are facing a 29% rate of PAYE above a high threshold?
I will not detain the House for much longer, but it is possible, if you get into the figures, to take a flow of payments and convert it into a stock. You can create extraordinary figures for liabilities or assets if you take what is essentially a flow of payments and convert it into a stock.
For example, graduates, during their working lives, are very likely to pay at least £500,000 in income tax. As, by and large, people who go to university earn a bit more, they leave university with the prospect of £500,000 of income tax debt, at least, around their necks. Should we be anxious about that? No. In their working lives, if they earn a decent income, of course we will expect them to make a contribution to the Exchequer through income tax. Just as you can apparently create enormous figures for debt by aggregating lots of years of income tax, if we think of the amount that we as a nation will spend on the National Health Service over the next 20 or 30 years, we can also construct an enormous figure by taking £100 billion a year or whatever and multiplying it by 20 or 30. So graduates have an enormous pile of income tax debt—£500,000 at least—in order to pay for trillions of pounds of National Health Service spending. That is because government is a going concern. Neither of those figures should be of concern to us, because we can manage them through the annual flows of income and expenditure.
I should like to draw these brief remarks to a close, however, by welcoming a point in the Motion of the noble Lord, Lord Stevenson, because it is the only way I should conclude a short speech when we are apparently saying farewell to his Front-Bench service. I agree that we need from time to time to look at how the system is working. We do not need to change the structure—we do not need another big review; another Dearing or Brown—but of course there is a social choice in this system. The social choice is the balance between private repayment by graduates, and the public—the generality of taxpayers—taking the burden of writing off repayments that will not be made by graduates who, for example, do not earn enough to reach the threshold. That is a public-private balance which, in a way, reflects that of public and private benefit from higher education.
It is legitimate from time to time to have a debate about what is the right balance between graduate repayment through PAYE and the likely level at which, eventually, graduates’ loans will be written off because they cannot afford to repay them. Incidentally, that would be impossible if we fixed the term in the way the party opposite want, but I think that every five years—once during the lifetime of a Parliament—such a structured review would be worth while.
I end by welcoming that aspect of the noble Lord’s proposal. This need not be done every year: the information is available. Once again, I thank him personally for the lively and well-informed contributions he has made to our debates on higher education and other matters in the recent past.
(7 years, 7 months ago)
Lords ChamberMy Lords, Amendment 444, in my name and that of the noble Lord, Lord Storey, seeks to mirror the rules around the benefits system, which require the Secretary of State to uprate benefits automatically each year in line with inflation unless he passes, as is currently the case, law to freeze them. The clause would mean that similar procedures have to be followed in uprating the starting point of £21,000 for repayment fees. Under the current tuition fees system, a graduate starts to repay their fees only if they are earning about £21,000 a year. One of the principles we agreed in coalition was that this threshold should rise in line with inflation from April 2017 so that only those earning a decent salary are repaying their fees. This is important in ensuring that only those who can truly afford to over their careers pay back the full £9,000 a year fees.
Liberal Democrats therefore strongly oppose the bad-faith decision of the previous Chancellor to freeze the repayment threshold. This effectively amounts to a change in contract terms for those with fees to repay that would be wholly unacceptable in any private business dealing. It is no wonder that Martin Lewis, who helped explain the Government’s original scheme, has sought legally to challenge this unfair retrospective action. The freeze means that people on relatively low incomes will start paying back fees, meaning those on low and middle incomes will end up paying back more while those on the top salaries, who will pay off their fees before they reach the 30-year cut-off, will be unaffected.
The issue is even more important considering rapidly increased inflation due to Brexit. Our amendment therefore seeks to provide a mechanism to ensure that the repayment level must rise with inflation. It uses rules around social security benefit increases to require the Secretary of State to consider whether prices have changed over the last 12 months—ie, inflation has taken place—and, if so, to increase the repayment threshold by a similar level. This would therefore require a new order every year to be placed before Parliament, ensuring the Government can never again unilaterally decide to freeze the point at which students start to pay.
Liberal Democrats hesitate, for good reason, to talk about university fees. We suffered the political consequences of breaking our contract with the electorate. The Chancellor was very clever, but there was very little saving in the end to the Exchequer and there were concessions to the Liberal Democrats. What we are looking at now is the elimination bit by bit, piece by piece, of those concessions, starting with grants and moving on to access, and so on. So the policy has clearly worsened, and what we have currently, with the raising of the threshold, is nothing short of a scandal. A contract has been broken and there has been a one-sided redefinition of the terms of the loan. In any other context, as Martin Lewis quite correctly said, this would lead to legal action. The only reason legal action is not possible in this case is the small print, which, as far as most undergraduates are concerned, was very small indeed.
This amendment is simply an attempt to avoid a repetition of that bad situation by defining a minimum level of earnings and a mechanism for adjusting it in a rational, open way. It would avoid partiality, exploitation, misunderstanding and lack of trust, which is absolutely crucial. That, surely, is the way to go. The Government would be doing the right thing by accepting this amendment. I beg to move.
My Lords, perhaps I could briefly challenge the proposals of the noble Baroness, Lady Garden. I do so very aware of how the Conservative Party and the Liberal Democrats worked together on this years ago, and I pay tribute once again to my former ministerial colleague, Sir Vince Cable, with whom it was a pleasure to work. But I think her account of the way the decision was taken is not quite correct and I do not think that her proposals for the future will work in the best interests of students or the Exchequer.
When we set the £21,000 repayment threshold in 2011, we were working on the basis of forecasts of where earnings would be by 2017. We thought we were setting the £21,000 repayment threshold at about 75% of earnings—I cannot remember the exact figure. What has happened since then is that earnings have grown by much less than was forecast, as a result of which the repayment threshold has become significantly more generous relative to earnings than we expected when we set it. With the wisdom of hindsight, I wish that we had put in brackets alongside £21,000, “that is, approximately 75% of earnings”, but what is relevant for graduates is that this is relative to their earnings and average earnings. On that basis, the purpose of the current freeze of the £21,000 threshold is to bring it back gradually towards the kind of relationship to average earnings that was envisaged when it was first proposed in 2011.
I agree with the noble Baroness, Lady Garden, that it would be worth having some kind of mechanism for review of this threshold. I have proposed a kind of five-year review at the start of each Parliament of the right place to set the repayment threshold. I do not think some fixed relationship to the RPI is relevant. The big social decision—it is a decision—is where it should be relative to average earnings. Of course, the coalition decided it should be a significantly higher threshold than that in the old system. Although I remember working with Martin Lewis on this, I think his argument that this is some terrible breach of faith is incorrect. This is actually a relationship to earnings which has ended up much higher than was originally expected.
I also think that Amendment 449 is misconceived and would be very dangerous indeed. It proposes that these loans should be regulated as if they are commercial loans by the Financial Conduct Authority. The student loans scheme steers a very narrow course between two equal and opposite problems. One problem would be if student finance were once more counted as public expenditure, as a result of which it would be rationed and we would not see the increase in cash for universities that we have seen. Although some people think this is public spending—to my surprise, the noble Baroness, Lady Garden, talked about there being very little saving to the Exchequer—the fact is that the shift to fees and loans achieved a very significant reduction in public spending. We do not want to go back to the days of it being public spending.
However, neither do we want it to be a commercial loan scheme. It is absolutely not a commercial loan scheme. I worked very closely with Lib Dem colleagues at every opportunity to explain to prospective students that this is not a commercial loan. This is not like an overdraft or a credit card. It is a universal scheme accessible to almost all students and is in no way like taking out a loan from a bank regulated by the Financial Conduct Authority. If the Student Loans Company were regulated by the Financial Conduct Authority, it would immediately have to go through requirements such as the “know your customer” requirement. It would have to decide: “Should we lend to young John Smith? Is he going to be able to repay? Should we lend to young Janet Smith? Is she going to be able to repay?”. That panoply of assessment of whether individuals should take out loans, which is part of the regulatory regime for commercial loans, should not apply to this provision. This is a universal scheme using taxpayer finance. Therefore, requiring it to be regulated as if it is a commercial loan would be a retrograde step and very regressive.
All three parties in this Chamber today, when faced with the dilemma of how to finance university education, have ended up with an essentially similar model: fees and loans, with a universal loan scheme. It is no accident that we have ended up with this model. It is because it steers between two equal and opposite perils. These Lib Dem amendments would destabilise that model, which is now working to the advantage of students, universities and the Exchequer.
(7 years, 7 months ago)
Lords ChamberMy Lords, in deferring to the noble Baronesses on the Cross Benches, Lady Brown and Lady Wolf, I now have pleasure in supporting the amendments in this group to which I have added my name. They express concerns raised by Universities UK and GuildHE, two bodies with immense expertise in this sector and fully committed to its standards and reputation.
As the noble Baroness, Lady Brown, has said, central to our concerns about the erosion of university autonomy is the need for the Government and the Bill to be clearer in their approach to standards. UUK and others have noted that the Bill unhelpfully elides quality and standards—we have had reference to this already in debate in this Chamber—but they are two separate concepts in higher education policy. While there is a legitimate role for the new Office for Students in assessing quality, standards are the preserve of independent academic institutions and should be free from political interference. The proposed changes to the Bill would therefore: separate quality and standards to enable different treatment in subsequent clauses; clarify the definition of standards to focus on threshold standards and a condition of registration focused on academic governance of standards; recognise that academic standards are sector-owned and ensure a sector-owned process for agreeing threshold standards; and remove or limit the reference to standards in relation to the teaching access framework, as it is inappropriate to attempt to rank standards.
Quality and standards are separate, distinct concepts in higher education. Amendments 63 and 129 to 131 would remove references to standards to make what was one potential condition of the OfS into two separate conditions for quality and standards. Amendment 131 would make robust academic governance a condition of registration with the OfS, which protects the principle that self-critical autonomous academic institutions are responsible for the maintenance of academic standards.
Amendments 167, 169 and 170 would ensure consistency of definition when it comes to quality and standards and, again, that governance of academic standards sits with the institution. Amendments 168, 180 and 184 seek to clarify that the proposed assessments of teaching quality established by these clauses is based on the quality of teaching in an institution and not on standards, while Amendments 214 and 215 would ensure the separation of quality and standards once again.
At various points the Bill brackets quality and standards together, as the noble Baroness, Lady Brown, has pointed out, when they are in fact related but distinct elements of quality assurance and assessment. Academic quality covers how an institution supports students to enable them to progress and achieve their award; academic standards are the student outcome standards that individual degree-awarding bodies set and maintain for the award of their own academic credit or qualifications. As drafted, the Bill risks the OfS being able in future to define and determine the standards applied, rather than ensuring that the standards set by autonomous universities are met.
During Committee in the Commons, the Minister gave some reassurance, saying:
“Let me be absolutely clear … this is not about undermining the prerogative of providers in determining standards. This is about ensuring that all providers in the system are meeting the threshold standards set out in the ‘Frameworks for Higher Education Qualifications’, a document endorsed and agreed by the sector”.—[Official Report, Commons, Higher Education and Research Bill Committee, 15/9/16; col. 308.]
This was helpful but the lack of clarity in the Bill should be addressed. It is essential that student outcome standards remain the responsibility of autonomous institutional academic communities and continue to reflect the pedagogical diversity of higher education. I hope the Minister will respond favourably to these amendments.
My Lords, briefly, I congratulate the noble Baroness, Lady Brown, on her lucid explanation of the thinking behind her amendments. She makes an absolutely correct point: quality and standards are distinct. As they were always put together in some of the original drafting, the understanding of their different functions in the system was being lost. She is right to remind the House of that. I do not know about the exact way in which her proposals have been drafted but the spirit in which she is trying to make that distinction much clearer must be right. We already have, through the QAA, a direct role in the regulation and inspection of quality, and that is right.
However, to just comment on what the noble Baroness, Lady Garden, said, there also is and has been a legitimate role in standards. Of course universities and higher education institutions have to be responsible for the specific decisions about standards, but threshold standards have been part of the QAA’s remit. At the moment, for example, in response to I think widespread concern about the effectiveness of the external examiner system—a concern raised by the Minister for Universities and Science, who it is good to see with us again today—HEFCE is investigating how that system operates. It is absolutely not, and should not be, intruding on the autonomy of individual institutions, but it is undoubtedly, in a broad sense, investigating and considering standards.
Provided that we have the capacity for that type of engagement in standards to occur—as we heard from what the Minister said in the other House, the threshold standards is a legitimate function as well—I hope it will be possible to find a way forward which embraces the spirit of what the noble Baroness, Lady Brown, is doing but at the same time recognises that any regulator has some legitimate role in standards, not just in quality.
(7 years, 7 months ago)
Lords ChamberMy Lords, I have added my name to amendments in this group as set out by the noble Lords, Lord Stevenson and Lord Lucas, and the noble Baroness, Lady Wolf. I also support Amendment 57, as introduced by my noble friend Lord Addington. They relate to the general duties of the Office for Students and reflect some of the concerns over the unprecedented powers of this new body. We have already addressed the issues in Amendment 41 to do with part-time study and lifelong learning.
Amendment 42 comes from MillionPlus, which is the Association for Modern Universities and has as much interest as anybody in maintaining confidence in the sector, which they have all joined relatively recently, and promoting the reputation which has been hard earned and needs to be protected.
Of the other amendments in the group, Amendment 43 is on the provision of higher education which meets the vocational and professional needs of the students. In the 20 years that I worked for City & Guilds, my work involved linking in with universities, professional bodies and the higher reaches on trying to gain transferability and acceptance for different types of awards. Anything that can be done to try to promote that transferability between types of qualification has to be commended—particularly, I suppose, in view of the degree apprenticeships coming up. Again, recognition of vocational achievement within an academic context there would surely be for the good.
The noble Lord, Lord Stevenson, has introduced amendments on supporting and working with student representatives. As we have addressed previously, if the Office for Students is to live up to its name it would be quite useful if students had something to do with it. Amendment 67 suggests that they could even have current experience of being a student.
The amendments on the financial health and viability of the sector are all self-explanatory and seem good. My last comment is on the right reverend Prelate’s amendment. I entirely agree with the noble Baroness, Lady Wolf, about the importance of diversity and how having providers with a denominational characteristic has to be a good part of the mix that we are trying to promote in higher education.
My Lords, I would like to comment on some of the interventions we have heard expressing concerns about alternative providers. Sometimes, it has been an unhappy story and alternative providers have not delivered what they were supposed to but some of the criticisms are unfair, for two reasons.
First, we should remember that these organisations have no access to research funding or funding for higher cost subjects, so there is a large range of university activities for which they have no access to public funding to engage in. In fact I know that for some of them, their grievance is that they would rather like to have access to some of these strands of funding so that they could provide a greater range of subjects.
Secondly, it is not entirely true to say that they are all of a sort. In my experience, they are quite astute at identifying where there are gaps in provision. For example, modern music is not a subject which is particularly accessible and well taught in higher education institutions. If you want some qualifications of higher education standard for modern music, you by and large go to an alternative provider. Many of them have focused on vocational courses. There is increasing interest in alternative models for delivering medical education. I am being wary as I see the noble Lord, Lord Winston, is poised but there is beginning to be debate about whether medical education could do with some innovation, and some new providers would like to come in.
The argument on this was very well set out at the time of Robbins. There was a lively debate then about new ways of delivering higher education, and the conclusion of some of the leading universities at the time and of the UGC was that the best way to get innovation in higher education was to allow in new institutions to deliver it, as that was a better way of achieving it than expecting the existing ones to do things differently. The new Robbins universities were of course set up without any prior track record. They got university title straightaway and came in with great ambitions for doing things differently.
As we go through these clauses there are lots of genuine concerns, which we need to focus on, about the weight given to competition and collaboration. I may come to those when we debate those clauses, but we should just remember that the story of the advance of British higher education is successive waves of new entrants coming in and doing things differently. That is why we have the diversity that we currently celebrate, and we should, as a minimum, expect it to be as possible in the future for new entrants to come in as it was at the time of Robbins and of the great Victorian reforms.