Higher Education and Research Bill

Debate between Lord Willetts and Lord Watson of Invergowrie

Report: 3rd sitting (Hansard): House of Lords
Monday 13th March 2017 Lords Chamber

[Lord Watson of Invergowrie (Lab)]

My Lords, Amendment 145 is in my name and that of my noble friend Lord Stevenson. Students beginning their university courses after 2012 were told that if they took out a student loan, they would be required to repay it at the rate of 9% of future earnings above £21,000 a year. The Government repeatedly promised that the £21,000 would be uprated each year from April 2017 in line with average earnings. Indeed, that was confirmed in a letter to parents by the then Minister for Universities and Science, who is now the noble Lord, Lord Willetts. That letter contained no caveats, so students and their families knew where they stood on repayment of their loans—at least, they thought they did until the 2015 Autumn Statement, when the then Chancellor announced that the repayment threshold for student loans was to be frozen at £21,000 from April 2017, instead of being uprated in line with average earnings.

This is fundamentally a question of broken faith: of trusting what the Government say proving ill founded. Quite apart from the substantive issue in the amendment, that question of trust is, we believe, far from insignificant.

This issue is being revisited following debate in Committee, when the noble Lord, Lord Willetts, used his ministerial experience to explain that when the decision was taken in 2011 to freeze the repayment threshold, the figure was based on 75% of projected average earnings in 2017. Earnings in the intervening period having risen by less than anticipated, the noble Lord told us that,

“as a result … the repayment threshold has become significantly more generous relative to earnings than we expected when we set it”.—[Official Report, 25/1/17; col. 729.]

Unfortunately, that possibility was not mentioned in his aforementioned letter to parents.

By the logic of that argument, had earnings risen more than anticipated, students would be facing an increased threshold next month. Noble Lords will forgive me if I cast some doubt on that being allowed to occur. Nor should it, because an agreement is an agreement and should be respected as such by both sides. The Government’s action amounts to breach of a contract, with one party unilaterally changing the terms of the student loan. In any other context, it would be open to legal action to have the contract enforced and that action would succeed.

When the Bill was considered in the other place, the Minister for Universities and Science, Mr Johnson, called on universities to redouble their efforts to boost social mobility. He was right in his exhortation, although wrong to suggest it was solely the responsibility of institutions. When Labour left office in 2010, 71% of state educated pupils went to university. By 2014, that figure had fallen to 62%. This change will have a disproportionate impact on graduates on modest incomes and will act as a disincentive to young people from less well-off backgrounds to take up a place at university, because they will know that a previous cohort of students were misled by the Government over the repayment term of their loans. The parents of that cohort were also misled, and some of the financial impact may well follow them.

Amendment 145 would prevent any changes to the repayment of a student loan, irrespective of whether that benefited students, after the terms and conditions of repayment had been agreed. This would apply to existing loans after the commencement of the Act and ensure that such a situation would not recur by bringing loans under the regulation of the Consumer Credit Act 1974—which, many people were surprised to learn, does not apply at the moment.

Some regulation of the student loan market is needed to provide the protection that students need. In replying for the Government in Committee, the noble Baroness, Lady Goldie, told noble Lords:

“On the matter of student loan terms and conditions, I share your Lordships’ desire to ensure that students are protected ... However, it is important that … the Government retain the power to adjust terms and conditions”.—[Official Report, 25/1/17; col. 732.]


How are those two statements capable of reconciliation? They are not, because only the Government are protected, not students—the very people that the Minister has consistently said throughout our deliberations are at the heart of this legislation. The unilateral reneging on loan agreements demonstrates that in fact, students’ interests can be dispensed with whenever the Government deem it necessary. That is unacceptable and is one more reason why the amendment should be adopted as a new clause. I beg to move.

[Lord Willetts (Con)]

I shall very briefly comment, as I have had my arguments referred to by the noble Lord opposite. The graduate repayment scheme is neither conventional public spending, nor is it a commercial loan. All three parties, when faced with the question of how you finance higher education, have concluded that the best way forward is through such an arrangement. If it is public spending, it will be a low priority, and the funding of universities will suffer. If it is a commercial loan, which now appears to be what the Labour Opposition are calling for, and if we really were to have it regulated under the terms of the convention on private loans, one of the first requirements would be the requirement to know your customer—to make an assessment of an individual recipient to see whether they have the capacity to repay a student loan. The agencies would have to decide whether to lend to any one individual or not, and disadvantaged students would certainly lose out from such an assessment. That is why this scheme is a midway house between two unpalatable alternatives, and why all three parties have backed it.

As part of that arrangement, it seems legitimate that Governments should be able to decide—I have always thought every five years, in an explicit public review—the balance between repayments by graduates and the remaining burden being borne by the generality of taxpayers, as the loans are paid off. That seems a sensible arrangement, bringing necessary flexibility into the system, and it is why it has always been made clear to students that Governments have the right to change the repayment terms as they wish. That seems a sensible feature—and if we go down the route of treating it like a private contract and repayment, it will have consequences which all of us in this House, particularly the party opposite, will come to regret.

Higher Education and Research Bill

Debate between Lord Willetts and Lord Watson of Invergowrie

Committee: 6th sitting (Hansard): House of Lords
Wednesday 25th January 2017 Lords Chamber

[Lord Willetts (Con)]

My Lords, having launched that original consultation document I am delighted that we now have these provisions in this Bill. It is welcome progress and the lack of legal framework to do it was the main reason for the delays. I very much hope that the new scheme can be brought in as quickly as possible. Although it is a familiar excuse, there are IT issues to be resolved and the noble Lord is right to press for rapid progress on that.

My one qualification to the noble Lord’s otherwise excellent speech was that we have to be careful not to assume that all Muslims take the view that the current arrangements are not acceptable within Islamic law. The good news is that there are many Islamic students whose religious advice is that they can use the current framework. There is a small number who do not believe that that is satisfactory and that is why we need this provision, but it is very important that this Committee does not give the impression that Muslims cannot use the current scheme. Many of them do and their imams say that they can.

[Lord Watson of Invergowrie]

My Lords, it is very much to be welcomed that Muslim students are to be offered Sharia-friendly student loans which should assist in applying to university, although I accept the point of the noble Lord, Lord Willetts, that only some students have been put off in the past in the belief that taking out a loan conflicts with their religious beliefs.

This is certainly a big step forward, but as the noble Lord, Lord Sharkey, outlined, when will it happen? He has traced the path that has been followed since 2012, when a government commitment was first made. As he said, the consultation exercise was undertaken and the Government responded in September 2014—quite quick for government replies. Their response said that,

“the Government supports the introduction of a Sharia-compliant takaful alternative finance product available to everyone, and will work on its development”.

That response also mentioned the need to find what was described as an “appropriate legislative window”. Two years on—more than that, in fact—we are at that window, yet we do not have a date for the commencement.

Amendments 442 and 516 in the names of the noble Lords, Lord Sharkey and Lord Willis, appear to me to be rather contradictory. Amendment 442 calls for the scheme to begin in the autumn of 2018, while Amendment 516 seeks its introduction immediately after the Bill becomes law, but no matter. We wish to see the scheme introduced as soon as it is practical, and I trust the Minister will outline the timescale that the Government have in mind. In particular, I hope they will offer some explanation if, as the noble Lord, Lord Sharkey, said, they suggested that a delay would be necessary until 2019. I found it very interesting that the noble Lord, Lord Sharkey, said that he had consultations with people in the Muslim community who said that it need not take that long, so we look forward to the Minister’s response on this important matter.

Higher Education and Research Bill

Debate between Lord Willetts and Lord Watson of Invergowrie

Committee: 4th sitting (Hansard - continued): House of Lords
Wednesday 18th January 2017 Lords Chamber

[Lord Willetts (Con)]

Noble Lords on all sides of the House appreciate the personal commitment of the noble Earl, Lord Listowel, to this issue. However, I have to say that there has always been a long queue of people who wish, for various reasons, to exempt students from fees. My view has always been that this is an extremely dangerous route to go down. Students do not pay fees, and as soon as one implies in some way that fees are a barrier to students getting into university, one feeds a misconception that can do enormous damage. Indeed, if students from care were not, through the Exchequer, repaying these fees, that would be a loss of revenues for the university. The noble Earl, Lord Listowel, has recognised that because his Amendment 449A provides an alternative means of financing their education out of public expenditure.

We have heard from the noble Baroness, Lady Brown, quite correctly, that we need to support more care leavers in university. If there were ever any public expenditure of the sort the noble Earl envisages in Amendment 449A, rather than devoting it to a group of students being exempt from fees that they are not going to pay anyway, it should be devoted to helping people leaving care to go to university. Exempting them from a fee that they are not going to pay anyway, or will pay only if they are in a well-paid job afterwards, is not the most effective way to help care leavers.

[Lord Watson of Invergowrie (Lab)]

My Lords, I, too, pay tribute, as I have in the past, to the noble Earl, Lord Listowel, for his hard work in many areas, particularly in respect of care leavers. We worked together last year quite effectively on the Children and Social Work Bill, and made some progress in terms of government concessions; I hope that we might have some success here as well.

I am slightly disappointed to hear what the noble Lord, Lord Willetts, said about exemption from fees, as that is not what is sought here, as I see it. The amendment seeks a limit on or exemption of part of the fees, but not an entire reduction. In the circumstances that is important, because we have to understand that for people leaving care even to get to university is quite an achievement in many cases. Only 5% of care leavers make it to university, compared with 38% of the population as a whole at that age. So it is incumbent on us to do what we can to offer some assistance.

The amendments proposed by the noble Earl, Lord Listowel, cover a number of areas, which together create a package which would be of considerable assistance. People leaving care are some of the most vulnerable young adults, and they need help and encouragement to make their own way in life after a childhood that has often been devoid of the kind of settled home environment that many of us simply take for granted. For that reason, it is surely right that any care leaver who succeeds in gaining the passes necessary to be offered a university place should not be denied it due to financial constraints. I take the point that the noble Lord, Lord Willetts, made about a university degree leading to higher earning, and that is the general backing that the Government, and Conservatives generally, give for tuition fees. That has some traction, but in this case you are dealing with people who have had many difficulties in their lives.

We also have to think about the question of accommodation, which another of the noble Earl’s amendments touches on. Some universities already discount fees; some do not charge fees to care leavers. But another issue is what happens outwith term time. As the noble Earl said in speaking to Amendment 229B, the question of accommodation can be a crucial factor. All too often, care leavers who begin a course of study do not complete it because they have been unable to settle during holiday periods, having no settled home to go to, to the extent that they do not feel able to resume their studies.

Being in care does not prevent young people achieving a successful life, but those who have spent time in the care system are less likely than other children to achieve academic success. In many cases, there has been a gradual improvement in educational outcomes, but the rate of care leavers going to university has hardly changed in recent years. Children in care have the wealthiest parent of all—the state—yet it fails them in the most fundamental aspect of child development: education. The noble Earl’s Amendment 122 should not be seen as a cost to the public purse. In the longer term, care leavers who complete their courses will put back more than they have received—an argument understood in Scotland. Last year, the Scottish Government decided that all young people who have experience of care and who meet the minimum entry standards will be offered a place at university. Of course, although fees are not an issue in that part of the UK, those students are awarded a full bursary, which will be worth £7,600 from academic year 2017-18.

That is an example of the extra, targeted help to those who most need it, so that young people who have had life experiences that most of us can barely imagine are given an enhanced chance to succeed in building a life for themselves. Reduced tuition fees should, I believe, be automatic for care leavers, although I accept what the Minister said on Monday about not all care leavers wishing to self-identify as such. There are various reasons for that and I hope we can at least try to understand them, but we should do all that we can to minimise those reasons in offering a helping hand into higher education. The group of amendments of the noble Earl, Lord Listowel, would provide a powerful means of doing so.

Higher Education and Research Bill

Debate between Lord Willetts and Lord Watson of Invergowrie

Committee: 3rd sitting (Hansard): House of Lords
Monday 16th January 2017 Lords Chamber

[Lord Willetts (Con)]

My Lords, perhaps I may briefly comment on these amendments by looking at them from the perspective of how the old system has functioned. We have been told about the powers of the OfS, and your Lordships are scrutinising those very carefully. I think that perhaps the powers of the old HEFCE have been understated. In reality, HEFCE was not only the funder but was using its funding power to be the regulator—a highly discretionary regulator that operated with very little transparency and few constraints.

HEFCE was the extremely successful buffer body between government and universities, and the Government communicated with HEFCE notably through the grant letter—and the grant letter, I suspect, is the origins of the guidance provision in front of us today. The grant letter is the way in which the Government have historically set out their policy, week by week, year by year, for universities, and so, for example, it has been historically possible for the Minister for Universities to go to the Chancellor and say, “High-cost subjects are not being sufficiently funded. We do not think that the extra costs of doing them are properly reflected in the higher cost bands. Will it be possible to have extra funding attached to that?”—and then in the grant letter to suggest to HEFCE, “In the light of the funding we have available, it would be excellent if HEFCE were able to identify and set aside more funding for high-cost subjects”. Indeed, I used to write such grant letters with my excellent former colleague Sir Vince Cable.

What is happening—this goes back to discussions we had last week—is that as we are now moving from that old discretionary high-trust system to a new rule-bound system with a regulatory function, quite understandably your Lordships, at each stage of the process, are trying to pin down what kind of decisions will be taken and how they will be taken. I think that a power to give guidance distinct from a power to give instructions, and a reasonable amount of flexibility for Ministers to use it so that they can communicate the same kind of messages that they used to in the old HEFCE letter, is in the interests of the sector as a whole.

[Lord Watson of Invergowrie (Lab)]

My Lords, the group contains several common-sense amendments that would strengthen the Bill and one of the amendments within this group seeks to ensure that the Secretary of State should have regard to any advice given to her or him by the Office for Students. The Government are placing a huge amount of faith and power in the Office for Students and it makes sense that the Secretary of State should not only give guidance to that body but should have regard to what the OfS says to her or him. Why would it not be sensible to do so?

It is not enough for the Minister to say, as he did several times in Committee, that he does not want to see too much detail on the face of the Bill. In effect, he is saying, “Trust me. There is no need for it. Everything will be fine”. With the greatest respect, even were we to accept that from such a find upstanding Member of your Lordships’ House as the noble Viscount the Minister, he cannot of course bind his successors, who, I suspect, would not be willing to be bound by him and his colleague Mr Johnson. Who knows what might or might not follow in the months and years after this Bill passes into statute? For that reason, it is helpful to have this sort of detail in the Bill. At the end of the day, it is only a question of having regard to what the OfS says, but it will have built up considerable experience and wisdom over time and the Secretary of State should surely benefit from that.

There are also amendments from the noble Baronesses, Lady Garden and Lady Wolf, and the noble Lord, Lord Storey, on the need to ensure that the Secretary of State does not take any action that would prohibit the Office for Students from funding a particular course of study. The noble Lord, Lord Storey, eloquently explained the reasons behind that and there was some discussion on this last week as well. I trust that the noble Viscount has taken note of the arguments advanced in support of those amendments.

The most important amendments in this group are Amendments 69 and 510, which seek to make the Secretary of State’s power to give guidance to the OfS exercisable by statutory instrument. Last month, the Delegated Powers and Regulatory Reform Committee of your Lordships’ House reported on its consideration of the Bill. When commenting on Clause 2(2) which requires that the OfS,

“In performing its functions … have regard to guidance given to it by the Secretary of State”,


the committee said:

“There is no Parliamentary scrutiny of the guidance and there is no requirement for it to be published. The absence of any Parliamentary scrutiny is explained in the Department’s memorandum”,


but that,

“We are wholly unconvinced by the Department’s reasons”.


However, it did not stop there. In summation of its consideration of that part of the Bill, the committee concluded:

“The wide range of functions which are being conferred on the OfS will give it the ability to bring change to the whole of the higher education sector. We consider that the guidance issued by the Secretary of State under clause 2 will act as a significant control over how the OfS exercises its functions. Therefore, far from having no Parliamentary scrutiny, we recommend that guidance issued under clause 2 should be subject to Parliamentary scrutiny and that the affirmative procedure should apply”.


That does not leave much room for doubt, and I am not aware that the Government have yet responded to the committee’s report, but I hope that they will be able to take such trenchant criticism on board—or will this be yet another example of the Government saying in effect that, “We know best. We have a monopoly on wisdom and we intend to plough on regardless”? I certainly hope not. The Delegated Powers Committee is of course cross-party and in this case was actually chaired by a Conservative. If its role is to be treated with respect, its considered view should surely be weighed heavily by the noble Viscount and his colleagues.

Last week the Minister undertook to reflect on the amendments debated and it is to be hoped that, as regards Amendments 69 and 510, the issue really is rather a black-and-white one. I hope that he will be able to give a considered response to it when he rises to speak in a few moments.