Viscount Younger of Leckie
Main Page: Viscount Younger of Leckie (Conservative - Excepted Hereditary)Post-18 Education and Funding Review
Viscount Younger of Leckie Excerpts
Viscount Younger of Leckie
That this House takes note of the Review of Post-18 Education and Funding led by Philip Augar.
Viscount Younger of Leckie (Con)
I thank all noble Lords who are to participate in this debate. I am very conscious of the knowledge and experience of the Peers down to speak and await all contributions with great interest. It gives me great pleasure to debate this report and the review of post-18 education and funding that it informs, not least because I no longer have to keep noble Lords in suspense about the publication date—“shortly” or “soon” becomes “now”.
I reiterate my thanks to the panel led by Philip Augar for its exceptional work. The panel consulted a wide spectrum of experts and received almost 400 responses to its call for evidence. I also thank all the stakeholders, including colleagues from across the House, who contributed to the review. Alongside Dr Augar were Professor Sir Ivor Crewe, Jacqueline de Rojas, Professor Edward Peck, Beverley Robinson and, last but certainly by no means least, the noble Baroness, Lady Wolf, who I am pleased to see is in her place today. On behalf of the House I thank her for her hard work and effort.
Noble Lords will be eager to know what decisions the Government are going to make. Your Lordships will not be surprised to hear that I cannot commit to any decisions here today. But I come in listening mode and am prepared to answer as many questions as I can.
Whatever route a student chooses, post-18 education should set them on a successful path for their future. We recognise that good careers information, advice and guidance are vital to help people of all ages make informed decisions about their options, including routes into further and higher education. That is why we launched a comprehensive careers strategy, as well as investing more than £70 million each year until 2020, to help ensure that young people and adults received high-quality careers provision. Meanwhile, the Careers & Enterprise Company has also invested in more than 150 employer-engagement programmes, benefiting 540,000 young people.
However, it is important to remember that most students in post-18 education are not at university. As Augar emphasised, further education and technical colleges play an essential part in delivering the modern industrial strategy, with its long-term plan to boost productivity. We are all more likely to have multiple careers during our working lives and must be conscious of the need for reskilling and upskilling.
Around 1.5 million jobs in England are at risk of some automation in the future. That is why we are bringing together businesses, workers and government through the National Retraining Scheme, which will help prepare adults for future changes to the economy, including automation. We will also look carefully at the panel’s recommendations on how we can encourage more flexibility across our post-18 system to support people in accessing the right education for them throughout their lives. I share the Secretary of State’s strong belief that both the HE and FE sectors can, and should, continue to thrive together. To ensure a genuine choice for young people, and to give employers access to a highly skilled workforce, we want to see a system where technical education has the same weighting for a young person as an academic route.
I will take a step back and look at how we reached this major review—the first review since the Robbins report in 1963—to look at the totality of post-18 education. As many noble Lords will note, our current system of post-18 education already has many strengths. First, we have a world-class higher education system, with four UK universities in the world top 10 and 18 in the top 100. That is truly to be celebrated. Secondly, we have record numbers of 18 year-olds entering university, including from disadvantaged backgrounds. Thirdly, students from the lowest-income households have access to the largest-ever amount of cash support for their living costs. Fourthly and finally, our student finance system removes up-front financial barriers and provides protections for borrowers so that they have to contribute only when they can afford to do so.
We should not overlook all that we have achieved on the back of the Higher Education and Research Act. The Office for Students became fully operational in April last year and will, inter alia, play a key role in delivering the Department for Education’s objectives to improve and support informed choice through the provision of effective information, advice and guidance to all students. The teaching excellence and student outcomes framework now holds universities to account for teaching and graduate outcomes; I will say more about that later. Finally, diversity and flexibility in the system continue to increase; for example, with possibilities for new providers and accelerated degrees.
We are already reforming technical and vocational education by establishing a technical education system that rivals the best in the world and introducing new T-levels in phases from September 2020, backed by the investment of an additional £500 million per year once they are fully rolled out; developing proposals to introduce employer-focused higher technical qualifications at levels 4 to 5 to rival traditional academic options; reviewing classroom-based higher technical education at levels 4 to 5 as part of creating a world-class system; and, finally, overhauling apprenticeships to put quality at the heart of the programme and to increase employer investment and engagement in training their workforces for the future.
I will now focus on the challenges we face, because challenges remain and parts of the system are not working as well as they could. We have seen further growth in three-year degrees for 18 year-olds but the post-18 system does not always offer a comprehensive range of high-quality alternative routes for the many young people who pursue a technical or vocational path at that stage. When young people apply to university, it is based on the assumption that a degree will set them up for a bright future, but today’s analysis shows that this is not always the case. In universities, we have not seen the extent of increase in choice that we would have wanted. The great majority of courses are priced at the same level and three-year courses remain the norm, when some courses clearly cost more than others and some have higher returns to the student than others. It is right that we ask questions about choice and value for money. Although 18 year-olds from disadvantaged backgrounds are now 52% more likely to go to university than they were 10 years ago, they are still less likely than their more advantaged peers to attend the most selective universities or to have the support that they need to complete their degree successfully and achieve a 2.1 or a First.
We have been concerned by the recent large increases in the number of unconditional—or conditional unconditional—offers received by students and the potential impact that these offers can have. We also have concerns about the serious issue of grade inflation. We must not allow the credibility of our world-class universities to be damaged by pockets of low quality. That is why the Secretary of State has tasked the OfS with driving out bad practices which are not in the student interest.
Meanwhile, although the funding system is a progressive one with built-in protections, those elements are not always well understood. Going to university should be a positive, life-changing experience but students need appropriate support, particularly as they matriculate, to deal with the challenges that starting university can include to ensure their well-being.
We have a vision for the future. The UK is truly a world-leading destination for study and research, but we recognise the concerns and that is why we committed to conducting this major review. Studying for a degree is expected to benefit those undertaking it, with improved employment opportunities and a wage premium alongside wider individual well-being and other social benefits. Low-value outcomes are not just about economic returns. High-quality provision in a range of subjects is critical for our public services and for culturally enriching our society. University is not just for investment bankers but for those who will go on to contribute to many other sectors, including our creative industries. We want to ensure that higher education improves the life of students and of wider society and we want to equip students with the information to make the right choice for them about where and what to study. Now our graduate data—commonly known as LEO—represents a step change in our ability to understand students’ labour market outcomes on leaving higher education.
Before I conclude, I want to draw attention to a recent announcement by the OfS. It has awarded £6 million for 10 large-scale projects to encourage higher education providers to find new ways of combating student mental health issues. These projects involve more than 60 different universities, colleges and other organisations, including NHS services, the police and charities, together contributing an additional £8.5 million in matched funding, taking the investment up to £14.5 million.
I greatly look forward to this debate and to hearing the views of all who are speaking today. The independent panel’s report forms an important step on the road to achieving our vision of the post-18 education system. I hope that noble Lords will forgive the cliché, but it rings true in this case: it is not the end of the process but rather the beginning. We will continue to engage with stakeholders now that the independent panel phase is complete, as we work towards the completion of this review. I beg to move.
Viscount Younger of Leckie
My Lords, we have had quite a debate and I am most grateful for all the contributions made today. Such debates in the House of Lords are often not just informative but forward-thinking, and today is certainly no exception. There have been many interesting insights and ideas promulgated, and we are listening. One point is certain; many Peers have praised the quality, thoughtfulness and thoroughness of the Augar report, and it is good to know that it is broadly welcomed and recognised.
I will address the points that have been made. Let me start with some remarks on student finance. Unsurprisingly, many Peers raised this issue, including the noble Lords, Lord Adonis and Lord Patel. The panel’s recommendations on student finance are detailed and interrelated, and cannot be considered in isolation. As my right honourable friend the Secretary of State for Education set out when the panel’s report was published, we will need to look carefully at each recommendation in turn and in the round to reach a view on what will best support students and the institutions they study at, and what will ensure value for taxpayers. This will include such proposals as the in-study and post-study interest rates, the proposed reduction from £9,250 to £7,500, the longer payback period, up from 30 to 40 years, and maintenance grants, about which I will be making some remarks later.
In answer to my noble friend Lord Norton’s point about the wider issues to consider, he is right; we should be thinking about links to the industrial strategy, to future skills needs and to research. I will be speaking more about that issue, which was raised not least by the noble Lord, Lord Kakkar.
To set a marker, the Government and the review panel are in agreement that the costs of post-18 education should be shared fairly between learners and the taxpayer. The taxpayer subsidy of higher education is a conscious and significant investment in the long-term skills capacity of our economy. It is crucial in enabling everyone with the ability to benefit from post-18 education to undertake it.
In my opening speech, I noted that our student funding system is progressive, with built-in protections for borrowers, but that those elements are not always well understood. My noble friend Lady Jenkin highlighted this fact and detailed it in her speech. I understand the concerns that she raised. She gave several examples, but I will give one whereby a graduate earning £27,725 a year will repay their student loan at a rate of £15 per month. Our income contingent loan system makes sure that student loan contributions are affordable and progressive, and that any unpaid loans are cancelled after 30 years at no detriment to the borrower.
The most recent forecasts from my department show that around 30% of plan 2 full-time higher education entrants in the academic year 2018-19 are expected to fully repay their loan within their 30-year repayment term. This rises to 45% for part-time higher education borrowers and 70% for master’s loan borrowers. This applies to all 53 recommendations, including those on student finance.
On the subject of the timetable, which was raised by my noble friend Lord Norton and the noble Lords, Lord Kerslake and Lord Bassam, we will be concluding the 18-plus review at the three-year spending review in the autumn, and not before. On the point raised by the noble Baroness, Lady Garden, about the TEF, Dame Shirley Pearce’s review—as I mentioned in the Chamber I think last week—is expected later in the summer. Maybe that falls into the category of “shortly”.
Moving on to student finance, the teaching grant is an important issue raised by a number of Peers, including my noble friend Lord Patten, the noble Lords, Lord Patel, Lord Kakkar and Lord Mair, and the right reverend Prelate the Bishop of Winchester. I was pushed to give a categorical guarantee on teaching grants by the noble Baronesses, Lady Deech and Lady Young of Old Scone, the noble Lord, Lord Kerslake, and the noble Baroness, Lady Blackstone. As they might expect, I cannot do that today, as I made clear in my opening speech.
I do, however, have some remarks to make. We want to ensure that universities continue to deliver world-leading education and are properly funded to do that. Since 2012, the total income of universities in England has increased by around £6 billion, driven by rising student numbers and the amount of funding they receive. Resource per student is at a near-historic high: the IFS estimates that the 2012 reforms increased real funding per student by almost 25%.
It is, however, true that the current context presents significant challenges to institutional management, efficiency and financial planning in the higher education sector. The leaders of higher education providers, which are autonomous bodies, are responsible for ensuring their institutions’ financial sustainability. Those leaders are adapting to a more competitive, uncertain environment and must continue to rise to the challenge.
The Office for Students will continually monitor and assess higher education financial sustainability, working closely with any provider that shows increased risk of financial difficulties. As I have made clear, however, neither the OfS nor the department will prop up failing providers.
The noble Baroness, Lady Wolf, raised the subject of higher education funding and sustainability. She said that she found it hard to believe that the cost of English had risen faster than that of chemistry, and that the fees are often higher than the cost of the provision itself. However, alongside the Augar report the Government commissioned a detailed study, through the good offices of KPMG, of the costs of provision, and this will form part of the evidence base for consideration alongside the report. This issue was also, I think, raised by the noble Lord, Lord Adonis.
We have given the OfS powers to ensure that all registered higher education providers have student protection plans in place to safeguard students’ interests, including against the risk of provider financial failure. The DfE also contributes to the teaching costs of higher education by providing the teaching grant to eligible providers via the OfS. This funding promotes student choice and skills for the country by maintaining the supply of high-cost subjects through support for teaching costs that exceed the tuition fee cap. Through the teaching grant provision the Government also support a range of important activities, such as access, successful participation and specialist provision.
In 2017-18, total higher education income in England was £32.3 billion. Tuition fee income represented nearly 50% of this, with universities receiving £15.7 billion in total from home, EU and non-EU students. Furthermore, it is important to mention that in 2018-19 the Government provided almost £1.4 billion in teaching grant funding to higher education providers, of which £681 million was steered towards high-cost subject funding and £277 million went to support the students most at risk of discontinuing their studies.
The Augar proposals on maintenance grants are another important subject, raised by the noble Lords, Lord Storey and Lord Mair, the noble Baroness, Lady Blackstone, and others. It is essential that we provide the right support to enable people from all backgrounds to access and succeed at university and other higher-level courses. That is why students from the lowest-income households now have access to the largest-ever amounts of cash-in-hand support for their living costs, as I said in my opening remarks. Living costs support increased by 10.3% for eligible students on the lowest incomes in 2016-17 compared with the previous system, with further increases of 2.8% for 2017-18 and 3.2% for the current academic year, 2018-19. The Government have announced a further 2.8% increase for living costs for the 2019-20 academic year to a record amount. We have also recently made a number of changes to support part-time and mature learners. This academic year, part-time students are able to access full-time equivalent maintenance loans for the first time. To clarify, I assure noble Lords that we will look carefully at the Augar proposals with respect to maintenance grants.
The right reverend Prelate the Bishop of Winchester mentioned nursing bursaries, so I will make a few remarks. On the question of a public service covenant—an interesting idea—the right reverend Prelate may be interested to know that in our Teacher Recruitment and Retention Strategy we have committed to rolling out phased bursaries for more subjects and will announce further details in due course. Our teacher student loan reimbursement pilot also aims to increase recruitment and retention in biology, chemistry, physics, computing and languages. Teachers of these subjects who qualified from the 2013-14 academic year onwards and teach in one of the 25 eligible local authorities can apply for a reimbursement of their student loan repayments. Applications for such reimbursements open this autumn. I would be pleased to meet the right reverend Prelate to discuss his idea and take it further.
The previous funding system for nursing, midwifery and allied health profession students was not working for patients, students or universities. Training costs were largely borne by the NHS, resulting in a capping of the number of trainees. The tuition fee model means that universities can offer more nursing places and students can access more funding than under the bursary system. Under this system, healthcare students will typically receive an increase in financial aid of up to 25% while studying. The Department of Health and Social Care has opened new routes into nursing for those who do not want, or are unable, to study for a full-time degree at university; this includes the nurse degree apprenticeship and the new nursing associate role.
Many noble Lords, not least my noble friend Lord Patten and the noble Lords, Lord Kakkar and Lord Mair, mentioned higher education research. We recognise the important contribution of universities to research, innovation and working with business. This is critical to achieving the ambitions of our modern industrial strategy, including delivering a spend of 2.4% of GDP on R&D by 2027, a target mentioned by the noble Lord, Lord Kakkar. That is why, since 2016, the Government have committed an additional £7 billion for R&D by 2021-22 through the National Productivity Investment Fund, the largest increase since records began. We are committed to making sure that funding reflects a sustainable model that supports high-value provision, meets the skills needs of the country and maintains the world-leading reputation of UK higher education. This includes not allowing the credibility of our world-class universities to be damaged by pockets of low quality.
My noble friend Lord Patten spoke about higher education autonomy. As he will know only too well, we enshrined that issue in the Higher Education and Research Act 2017, in which I played a part. We must remember that universities are autonomous. The Government’s role is to create the right conditions so that universities can respond to our economic and strategic priorities. Our ability to direct universities is therefore necessarily limited in legislation.
The noble Lord, Lord Kakkar, raised concerns about the sustainability of research funding if and when fees are reduced. We will also work with the Office for Students to make sure that overall funding supports high-value provision, supports access and successful participation for disadvantaged students, and maintains the world-leading reputation of UK higher education. I assure him that it is very much on our radar.
I should also like to touch briefly on value for money for higher education, raised by the noble Lord, Lord Bassam, and others. I say again that outcomes are not just about economic returns. We want to ensure that higher education improves the lives of students and the wider society. Even within subjects, however, data shows that there is a variation in returns across institutions. Every subject for men and most subjects for women have at least one institution that offers a negative return and one with a positive return. As I said in opening, we want to equip students with the information to make the right choice for them about where and what to study.
The noble Lord, Lord Bichard, and my noble friend Lord Patten stated that the review placed too much emphasis on graduates’ salaries as a proxy for value, to the detriment of creative arts institutions, for which there is already a deficit in funding. In response, the Government, via the OfS, provide funding to support the cost provisions not met by tuition fees, including for art and design. The Government also provide funding to specialist providers with world-leading teaching, including providers that specialise in performance and creative arts. This funding totals £44 million for 2019-20.
I will touch briefly on contact hours, which is an important subject raised not least by the noble Lord, Lord Blunkett. It is clearly an important consideration for Government because contact hours for students, and particularly the information on contact hours, is known to be an issue. The Government consider that it is important for students to have clear and accurate information about their course, including methods of assessment, expected workload, contact hours and information about total costs. Consumer protection law can provide important protections for students in this regard, but providers should ensure that they meet their legal obligations. Again, this is something that Augar has touched on and we will be looking at carefully.
I turn now to a very important area raised by a number of Peers, that of further education and levels 4 and 5. We want our workforce to have world-class skills and we want our education system to provide opportunities for everybody to improve their position in life. That is why we are undertaking a review of higher technical education at levels 4 and 5 to ensure that these qualifications can better meet the needs of learners and employers and benefit the economy. We expect to publish our higher technical proposals for formal consultation this year, in 2019.
The matter of levels 4 and 5 was raised by the noble Baroness, Lady Blackstone, and my noble friend Lord Patten. It is interesting that they both made a series of points about further education funding and specifically about further education teachers’ pay. We have also made significant investment in further education, specifically in teaching. Since 2013-14, we have invested in further education teachers and leaders. As part of our package of support for further education teaching, we have invested £20 million over two years to prepare for the introduction of T-levels, which, the House will know, are coming in in September 2020. To reassure the House, this is not to say that more cannot be done, but there has been some progress.
More meaningfully, I want to address a point raised by the noble Baronesses, Lady Blackstone and Lady Garden, my noble friend Lord Patten, the noble Lord, Lord Bichard, and my noble friend Lady Stowell, whom I wish a happy birthday today. All of these Peers raised the importance of further education. The noble Baroness, Lady Blackstone, said that further education had been poorly funded. My noble friend Lord Patten said that it had been treated rather badly by Conservative Governments: I think the word was plural rather than singular. I recognise that appropriate attention to our college sector—the backbone of technical education in this country—is required to ensure that technical education is an equally valid path for a young person as academic routes. If it was not clear in my opening speech, I emphasise now how important it is to promote further education for all pupils and students.
In the meantime, we have protected the base rate funding for 16 to 19 year-olds for all types of providers until the end of the current spending review period in 2020. Overall, we plan to invest nearly £7 billion during this academic year so that there is a place in education or training for every 16 to 19 year-old who wants one. Our commitment has contributed to the current record high proportion of 16 and 17 year-olds participating in education or apprenticeships since consistent records began.
On the question of skills raised by the noble Lords, Lord Aberdare and Lord Bichard, our reforms to the skills system place employers at the centre, making the system more responsive to deliver the skills that employers need and which the economy demands. Skills advisory panels aim to bring together local employers and skills providers to understand and address local skills challenges. That is why £75,000-worth of funding has been allocated to all local enterprise partnerships, mayoral combined authorities and the Greater London Authority to help build their analytical capacity.
Flexible learning is a big subject. It includes the decline in part-time learning and, importantly, the accelerated degree which was raised by the noble Lord, Lord Luce. The Government recognise the importance of studying part-time and the importance of promoting accelerated degrees or even undertaking degrees over a longer period of time. The benefits can be brought to individuals, employers and the wider economy. As the noble Lord, Lord Judd, said, it is for all people to fulfil their potential. He is right. Shorter degree courses appeal to those who want to retrain and enter the workforce more quickly than through a traditional course. We have legislated to increase the total tuition fees for accelerated courses to make them more affordable. But I say to the noble Lord, Lord Luce, that there is much more to be done to market two-year degrees. We have spoken about that, but on the back of the regulations that we have taken through the House, I very much expect and wish that to happen.
Time is rather against me and I want to make some concluding remarks, which means that I will have to write quite a long letter to noble Lords because there are a good number of questions that I have not addressed, including career hubs, raised by the noble Lord, Lord Aberdare. I also wanted to make a few points about career management, which was raised by the noble Lords, Lord Blunkett and Lord Turnbull. We are doing a lot in that area, as I have said in the Chamber before, but let me put that into a letter.
Certainly, on apprenticeships, I am pleased to say that we are having a debate on Thursday. I have a lot to say on apprenticeships, which were mentioned by the noble Lords, Lord Layard and Lord Aberdare. I will write a letter. Maybe I can combine it with a letter on the back of the debate on Thursday—who knows? We will have to wait and see. Productivity is also very important. I could spend ages speaking about the importance of productivity.
But I conclude by recognising what the noble Lord, Lord Judd, said about the OU. I pay tribute to the OU and wish it a happy 50th birthday because it embodies the ideal that no one’s background or circumstances should hold them back from a university education. I was lucky enough to pay a visit to the OU the other day. I found it fascinating I was struck by the sophistication of the technology there.
Once again, I offer my deep gratitude to the Augar panel for bringing its recommendations, which the Government will consider in turn. I look forward to further discussions on this important subject.