Higher Education (Industry and Regulators Committee Report)

Viscount Chandos Excerpts

Tuesday 21st May 2024 Grand Committee

[Viscount Chandos (Lab)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Agnew, who is a stimulating and enjoyable colleague on the committee—even if he probably classifies me as one of the madmen who believe that the British higher education system is something that we should be proud of and do everything to protect.

Being privileged to be another member of the committee, I am very grateful to my noble friend Lady Taylor for her incisive introduction and for her leadership of the committee, now and during the inquiry, along with the noble Lord, Lord Hollick. Noble Lords have already heard from other members of the committee and can judge the strength of both the individual views and the consensus that was reflected in the report. I will try not to repeat the many excellent points made by all speakers this afternoon. I will leave it to my noble friend Lady Taylor to respond, if she wishes, to the suggestion of the noble Lord, Lord Johnson, that the committee has been captured by providers, just as HEFCE allegedly was in the past.

I draw the attention of your Lordships to my entries in the register of interests, in particular as a vice-chair of LAMDA and as a co-opted member of the investment committee of Worcester College, Oxford.

If the crisis in higher education was looming at the time of the report’s publication, it has well and truly arrived nine months later, although the Government are doing their best to exacerbate the crisis with new measures, most of all through the threatened change to the visa regime. We cannot, as a committee, claim paranormal levels of foresight in predicting the crisis; the evidence that we heard and received, as well as the data that we analysed, told us only too clearly that all was not well in the state of higher education. It was deeply frustrating that, in our interactions with the OfS at the time of the inquiry, it seemed to be in denial. It is hard to judge whether this was complacency —a smoothing snooze at the wheel—or a regrettable lack of transparency.

Of course, the OfS is not responsible for setting government policy. We should be careful not to attribute failures on the part of the Government to the regulator, even though, as the committee found, there was a worrying lack of distinction between the Government and the OfS—a subject to which I will return.

In its report published last week, Financial Sustainability of Higher Education Providers in England, the OfS writes that it

“has an important role in monitoring and reporting on financial sustainability, and intervening to protect the interests of students, as far as is possible, if a provider is at risk of closure”.

It goes on to note that it does not

“have the powers or remit to intervene … in support of sustaining the system as a whole”.

However, has it given, on a timely basis, firm, clear and objective advice to the Government as to the threats to the system? I do not know what may have been said behind closed doors but what the OfS said to our committee—a committee of Parliament to which it owes a duty of transparency—did not instil confidence in either its grasp of the situation or its willingness to speak truth to power.

Here we come back to the strong discomfort felt by the committee about the independence of the OfS from government, or the lack thereof. If the OfS’s financial sustainability report shows belated recognition of the developing crisis, the accompanying document, Navigating Financial Challenges in Higher Education, is not encouraging. It says:

“A focus on cash management may help with short-term resilience but, in the longer term, more significant mitigating action is likely to be required”.


That is fair enough. So, what might the mitigating action comprise? This could involve, says the OfS,

“rethinking an institution’s business model, for example rebalancing the resources spent on teaching and research, phasing out some courses, or seeking to recruit different students to different types of course”.

That prescription manages to combine the banal with the ominous.

My noble friend Lady Taylor referred to cuts already implemented. At Oxford Brookes University, the music and mathematics departments are being closed outright, while staff cuts are also taking place in English and creative writing, history, film, anthropology, publishing and architecture. These are not departments failing to deliver high levels of education, nor are they training for industries in which the UK is not a leader. In a dynamic society and economy, change is inevitable and to some degree desirable, but the cuts at Oxford Brookes are damaging to the institution and the sector and are a deeply worrying trailer of what the OfS is advocating in rebalancing resources.

If the OfS will not fight the higher education sector’s corner, Parliament can. The committee’s report challenges the Government as well as the OfS. Financial sustainability in the HE sector cannot be achieved through cuts alone; funding must be increased in real terms, whether through an increase in the cap on fees or, as I would prefer—whatever pressures on the Exchequer the next Government face—a return to the hybrid combination of fees and direct grants that existed before the Conservative-led Government, in place from 2010 onwards. Or do the Government actually agree with that profound political thinker, Rod Liddle, who argued this Sunday that the number of universities should be reduced by two-thirds and that the proportion of young people going to university should be reduced to 15%? Can the Minister reassure the Committee that that is not the Government’s objective? If not, does she agree that, to avoid this happening accidentally, significant real increases in funding must be put in place?

Higher Education

Viscount Chandos Excerpts

Thursday 7th March 2024 Lords Chamber

[Viscount Chandos (Lab)]

My Lords, I thank my noble friend Lord Blunkett for securing this debate and for his compelling introduction. I am tempted to say, “The prosecution rests, m’lud”, and sit down, but your Lordships will be disappointed that I shall try to add a few points to those made by my noble friend.

The array of former Education Ministers, vice-chancellors and other higher education experts speaking today reminds me, in making my declarations of interest, of my status as an enthusiastic amateur in a field of professionals. I am a trustee of the drama school, LAMDA; chair of an apprenticeship provider, the Credit Services Association; and an external member of the investment committee of Worcester College, Oxford, of which I am an alumnus. I am also a member of the Industry and Regulators Committee of your Lordships’ House, which published its report on the OfS and the challenges for the HE sector last summer. I look forward to debating that when the usual channels have agreed a date.

I shall try to avoid repeating the data and arguments already set out compellingly by other speakers. Higher education is vital to growth, productivity and levelling up, as well as to non-economic benefits, such as health, life expectancy, crime reduction and the general strengthening of civil society, as cogently argued by the noble Lord, Lord Willetts, in the Economy 2030 Inquiry and touched on in his speech a moment ago.

The impact of universities

“on human and intangible capital is self-evident”,

as Jonathan Grant and Andy Westwood wrote for the Bennett Institute for Public Policy—self-evident, but perhaps hard to measure. That may be one reason why too much of the debate about higher education policy in recent years has focused on the more measurable economic benefits, nationally and locally, to the communities and regions in which universities are located. These are important and hugely welcome consequences of investing in HE, but does the Minister agree that there should be absolute clarity that the mission of universities and other HE institutions to provide UK students with the highest-quality higher education should be first, second and third at the heart of government policy?

Excellence in teaching and research costs money. We seem to have reached a position, as my noble friend Lord Howarth has already said, where student fees and living costs are becoming higher than many young people can take on responsibly, while UK undergraduate fees are increasingly inadequate to fund the universities’ provision for teaching these degrees—a circle that will need somehow to be squared by future Governments.

In the meantime, I will end by briefly raising the disparity of wealth and endowments among UK universities. The US system is different, but it is worth remembering that, among the private universities—Harvard, Yale and Stanford—there are endowments of $40 billion to $50 billion, generating a return of $2 billion to $2.5 billion a year for those universities. But even among the public universities in the US, there are 50 with endowments of over £1 billion. In the UK, Oxford and Cambridge each has endowments that are 16 times greater than those of the next best-endowed university, Edinburgh. I do not for a moment want to discourage donations to either Oxford or Cambridge—to my former college, Lindsay Owen-Jones has been a recent, enormously generous benefactor—but we need to level up and find ways in which to assist the many other excellent universities to boost current and capital fundraising through match funding and other initiatives.

Higher Education: Financial Pressures

Viscount Chandos Excerpts

Thursday 30th March 2023 Lords Chamber

[Viscount Chandos (Lab)]

My Lords, I join other noble Lords in thanking my noble friend Lord Knight of Weymouth for securing this important debate and in paying tribute to his powerful introduction to it. I strongly endorse his analysis of the intense financial challenges faced by the higher education sector and add my voice to the questions he asked the Minister. I declare my interest as vice-chair and trustee of the drama school LAMDA and as a co-opted member of the investment committee of Worcester College, University of Oxford—a rich university with a poor college within it.

I am also privileged to have taken the place of my noble friend Lady Donaghy as a member of the Industry and Regulators Committee of your Lordships’ House. I am therefore currently involved in the inquiry into the Office for Students. I would be as unpopular pre-empting the conclusions of the committee as I would be giving a plot spoiler to the current series of “Succession”—which stars, in Brian Cox, a distinguished alumnus of LAMDA—but some of the points that I will make this afternoon have been formed by the evidence about the HE sector that has already been heard by the committee.

Academic politics is

“the most vicious and bitter form of politics, because the stakes are so low”,

wrote Professor Wallace Sayre in the 1950s. He may have been reflecting the views of President Woodrow Wilson, and subsequently Henry Kissinger has characteristically claimed the analysis for his own. Senior common-room debate can be impassioned on a wide range of subjects, and the intellectual self-confidence of members of the academic community undoubtedly makes the governance of universities and HE institutions challenging.

Professor Sayre’s dictum may accurately represent one aspect of academic life, but it would be completely wrong to interpret it more broadly as implying that the stakes in higher education generally are low. They could not, in fact, be more important. That importance is based on the education and training provided to UK citizens of every age, but particularly as young adults; the research and innovation undertaken of national and global scope; the economic benefits of a vibrant HE sector nationally; and, as my noble friend Lord Knight and others have highlighted, the benefits for local communities. It also includes the contribution to the UK’s international standing and relationships through the foreign students who are drawn to the excellence of our institutions. Where these are all interconnected, students benefit from being taught by academics at the forefront of research and from their interaction with overseas students, for instance.

I believe that there should be greater clarity in defining the priorities and objectives for HE policy. I would argue that it should be first and foremost about providing that education and training to UK students in order to create a productive workforce and a civilised society. The economic benefits arising directly from the sector, such as £20 billion of export earnings, £100 billion of GDP and the driving economic force in many local communities, are hugely important, but they are a welcome by-product of the central objective of providing the best possible education for current and future generations. Research is of course vital but, whereas teaching is universal to all HE institutions, research is more concentrated—not, I should emphasise, in Russell Group universities alone but wherever specialised expertise resides.

I believe that thinking about HE policy in this way is essential for any fair and successful reform of funding. Not only is it necessary to increase the overall funding for the sector in real terms, it needs to be implemented in a way that ensures, as far as possible, that the costs fall fairly and proportionately on the different stakeholders. For instance, there is disagreement about the extent of cross-subsidies between teaching and research most of all, but this issue must be resolved as part of any sustainable changes to the funding of the sector. With the cap on tuition fees for domestic undergraduate courses frozen in nominal terms, and therefore falling in real terms at an accelerating rate, there is increasing divergence between the fees for domestic undergraduates and what the market for foreign students may be able to bear. There must be an increasing risk that, however much vice-chancellors and their governing bodies are committed to the mission of teaching UK students—as I have heard them say—an unreformed system will inexorably increase the pressure to further emphasise the recruitment of foreign students for narrow financial reasons.

In my remaining time, I will touch briefly on the importance of smaller, specialist institutions. LAMDA, of which I am the vice-chair, is one, along with other world-leading drama schools, music conservatoires and the Royal College of Art, which has been rated the number one art and design college in the world for eight consecutive years. Through the OfS, the Department for Education provides additional funding for some specialist institutions in recognition of the higher costs involved in teaching these specialist courses, as well as the proportionately higher costs that come from being a small, stand-alone institution. Sir Michael Barber, the first chair of the OfS, has recorded the importance that he attached during his term of office to protecting and enhancing the position of such institutions. That support is very welcome and, I believe—I would, wouldn’t I?—fully justified. The world-leading reputation of these institutions and the quality of the education and training provided are fundamentally based on their small size and independence; I say that without denigrating the excellent courses in these areas provided by larger, multi-faculty universities. Can the Minister confirm that the Government remain committed to supporting smaller, specialist institutions at historic levels or higher?