Higher Education Reform

Baroness Barran Excerpts

Tuesday 5th November 2024 Lords Chamber

[Baroness Barran (Con)]

My Lords, after relative silence in the Budget about the higher education sector, we on this side very much welcomed yesterday’s Statement from the Secretary of State for Education, but it raises a number of questions. I appreciate that the noble Baroness may want to write on some of them, but I hope that others require just a yes or no.

In the Statement, the Secretary of State talked about being “crystal clear” with students that their monthly repayments, once they graduate, will not increase. She was less than crystal clear about the fact that their total repayments will typically go up over the life of the loan. Can the noble Baroness confirm that I have understood that correctly? Have her officials calculated how much more the average student will repay once they have graduated?

The Secretary of State also talked about how she will

“secure the future of higher education so that students can benefit from a world-class education for generations to come”.

In his recent blog, Nick Hillman of the Higher Education Policy Institute took figures from the Institute for Fiscal Studies on how much the income of universities will increase as a result of the changes announced yesterday and the increase in the national insurance contributions they will need to make as a result of the changes announced in the Budget, as calculated by the Universities and Colleges Employers Association. He estimates that the net benefit to universities will be about £18 million, or £45,000 per institution.

The noble Baroness said earlier today that we on this side of the House need to understand that you have to raise money to fund public services. I assure her that we understand that very well, but the serious point is whether the two decisions the Government have made in recent days will make a material difference to universities or not. It would be helpful to be clear on that. There is also the impact of cutting fees for foundation-year courses. Is there a figure for the impact of that? Can she clarify what this means for undergraduates who have already started their course, as there was some confusion in Wales when fees were increased recently and it played out differently in different institutions? It would be helpful to know whether this will be applicable to those already part-way through their studies. The Statement was also silent on how this impacts postgraduate student fees and the disabled students’ allowance. It would be helpful to understand those changes.

In the Statement, the Secretary of State spoke of her ambition to spread opportunity to disadvantaged students, which every part of this House will firmly agree with. However, she then asserted that:

“The gap between disadvantaged students and their peers in progression to university … is the highest on record”.


I looked at the data that the department helpfully published recently and, while she might technically be right, the spirit of what has happened and the reality for disadvantaged students is very different. I am not quite sure why she chose to use free school meals as the definition of “disadvantaged” rather than the POLAR4 quintiles. Leaving those technicalities aside, if we look at what has happened in access to higher education between 2013-14 and 2022-23 for disadvantaged students using the Secretary of State’s definition, there has been a 43% increase in the percentage going to higher education compared to 25% for their peers. For high-tariff universities, the numbers for those on free school meals are up 109% compared to 48%. The percentage of more advantaged students is much bigger than that of disadvantaged students, but opportunities for disadvantaged students, which we all care about, have really improved. I hope the noble Baroness will acknowledge that.

The Secretary of State talked about a “renewed drive for efficiency” and said that the Government will not accept “wasteful spending”. We agree in principle, but can the noble Baroness give the House a sense of where the Government see waste in the sector and whether they have an estimate of what it amounts to. Can she reassure us that this will not threaten the independent status of our universities?

The Secretary of State talked about an uplift of £414 on maintenance loans. I would be grateful if the noble Baroness could confirm that this was calculated on a maximum loan for a student studying and living in London and that the average will be closer to £223 per student or 61p per day.

Looking to the future, the Secretary of State promised a policy paper on HE reform. Can the noble Baroness confirm what colour it will be—white, green or neither? Can she give the House any sense of the Government’s thinking on improving access to universities for those who have worse access today? Will it be a positive focus on particular groups or through new penalties?

Given the delay in the introduction of the lifelong learning entitlement, it would be good to hear that the Government remain committed to that, and to the work on sharia-compliant finance.

As my remarks have shown, the Statement left many unanswered questions, and I hope we see more in the forthcoming policy paper. However, despite the rhetoric in the Statement, the bottom line is that the net financial impact is hard to see for universities, so the policy paper will need to come quickly and tackle the real issues they face.

[Lord Storey (LD)]

My Lords, we welcome the Secretary of State’s Statement on universities in the Commons yesterday. Labour introduced student loans, and in opposition Keir Starmer wanted to abolish them. No doubt he cannot because of the £22 billion black hole.

We know that in 2015, the Liberal Democrats paid the price for making a pledge on tuition fees that we could not keep, but our reforms at least made the system fairer by giving more support to pupils on low incomes and ensuring that the least well-off graduates repaid the least.

Now, our universities are crying out for government to look at their funding, which has remained frozen for eight years. The Conservative Government, while espousing their importance, did nothing but abolish the maintenance grant, so that living costs became a barrier to university learning for disadvantaged students. The previous Government also cut the repayment threshold to £25,000, so that today’s students have to repay hundreds of pounds more per year than older graduates on the same salary. They lengthened the repayment period from 30 to 40 years, so today’s students will still be paying back their loans in 2066.

Does the Minister agree that the crisis in funding must be addressed, and have the Government considered how to support universities without raising fees? Will the Minister look at the benefits of international students and give universities stability in this area of policy? Finally, will the Minister look at how universities spend their allocation of £10,000 per student, so that students get value for money and a good university education experience, and the money is spent as efficiently as possible?

[The Minister of State, Department for Education (Baroness Smith of Malvern) (Lab)]

My Lords, first, I welcome the positive response to yesterday’s Statement and announcements. I think we all understand that this country is blessed with a world-class university sector whose teaching, research, contribution to the staffing of our public services, international reputation, earning and impact are significant and something we want to defend and ensure continues into the future.

Sadly, on coming into government we feared that the crisis in the funding of higher education put all these things at risk. That was the reason for taking the action we announced yesterday: to increase tuition fees by 3.1% and to reflect the challenge that students have faced, particularly from the cost of living, by increasing maintenance loans as well. We were also very clear that alongside that increase in investment that students will make in our higher education sector, we also expect to see considerable reform, which I will come on to in a moment.

Let me respond to the points raised by the noble Baroness, Lady Barran. First, on repayments, she is right that the way in which both tuition and maintenance loans are repaid means that no student will pay more per month. Of course, no student pays anything, up to £25,000-worth of annual income. The total amount a student pays depends on whether they repay within the 40-year time limit for the loan. Any student who currently would not repay within the 40 years—because they were on a low income or had gaps in work—will not pay any more with the increase in tuition fees. It is of course right that anybody who would have repaid during that time period will now have a larger debt to repay; but to reiterate, that is no cost upfront and no higher repayment per month after graduation.

On the impact of both the national insurance contributions and the changes to foundation degrees, we will publish an impact assessment alongside the statutory instrument that will bring about the increase in the fees, and we will spell out the analysis at that point. Regarding students who have already started, the intention is that the tuition fee increase will apply to new and existing students, but that could depend on the contract and arrangements made between the university and the individual student. We will make further announcements on the changes to postgraduate support and the disabled students’ allowance in due course.

The noble Baroness also raised the issue of the gap in respect of disadvantaged students. I think she conceded, as my right honourable friend stated yesterday, that this year the gap between those who are more advantaged and those who are more disadvantaged has widened. Although there are more students, both advantaged and disadvantaged, going to university now, it is not good enough to rest there: not only have we been incapable of closing that gap, but it has widened in the last year. That is why, as the first of the elements of the reform programme, we will undertake serious work with the sector, with those who support students in applying to higher education and with schools, and think about what more we can do to support anybody who could benefit from and wants to take part in higher education, so that they can access it.

We are determined to close—

[Baroness Barran (Con)]

Before the Minister moves on, first, I would be grateful if she could confirm that since 2013-14, the percentage of disadvantaged children going to university has grown faster than the percentage of those from advantaged homes. Secondly, while the free school meals measure has shown an increase in the gap, if we take the POLAR4 quintiles—I am sorry to be, as the noble Baroness, Lady Sherlock, would say, a wonk about this—the gap has decreased. Does the Minister agree with her department’s data on that?

[Baroness Smith of Malvern (Lab)]

I am sure that my department’s data on that is correct, but I stick with the point made yesterday, which is also correct: if we take the free school meals measure in the most recent year, in contrast to what happened previously, we have seen the gap widen. My broader point was that, frankly, it does not matter which measure you take, we have not seen a sufficient closing of that gap. It is still wrong that students from disadvantaged backgrounds who could benefit from higher education are not getting that benefit. That is why we will take action, alongside the sector and others, to make sure that we can improve both access to higher education and the measures of continuation and progression out of higher education. In those figures, we have seen a differential between those who are disadvantaged who come into higher education and those who are advantaged. Not only is it more difficult to get in but it is more difficult to continue in their courses and to succeed. That is where we need to take action to improve the situation.

On efficiency, we are absolutely clear that providing additional funding for higher education brings with it a responsibility for the sector to spend that money as efficiently as possible—to provide the quality of experience that students have the right to expect, and in a transparent way—and we can use appropriate metrics to measure that. We will want to do that work alongside the sector itself, but we are clear that we need to see improvements in efficiency in exchange for the increase in investment, and that that is non-negotiable.

On the maintenance loan, the important point is that the maximum loan for any student will be going up by 3.1%.

On the other areas of reform, access is very important, but we have also made it clear that universities need to play a crucial role in the Government’s growth mission. We need to see them working alongside Skills England. We need to work with them to see what more they can do to contribute to growth in the economy. They already play a crucial civic role; we want to see that strengthened so that all those who argue for universities in their areas—quite rightly, because they understand the social, cultural and economic benefit—will see that maximised. We recognise the quality of what is provided in English higher education, but we want to ensure that where there are pockets of bad quality that is tackled, and that everywhere there is an emphasis on improving the quality of teaching provided for our students.

On the alternative financing mechanism, we will make progress on that, building on the work of the previous Government and the noble Baroness in particular—she knows that we are reconstituting the working group on that because she will be invited to be a member of it, so she will share in the responsibility for the progress that I hope that we are going to make.

The noble Lord, Lord Storey, asked whether other methods of funding universities had been considered. We have given considerable thought to the options for how we can help to bring some stability to the financial position in HE and to support students. Given the current financial situation and the constraints on spending, this was the most appropriate way to provide some additional income and certainty for HE. As a matter of principle, it is right that students who benefit from higher education—it is still the case that a degree or a qualification through a university will give you on average higher lifetime earnings—make a contribution to that through repaying their loans, alongside the contribution made by the taxpayer and the Government more broadly, particularly for those students who do not end up paying off all their loans, and the strategic priorities grant and other forms of support for higher education.

I agree with the noble Lord and hope that he has seen a very different tone towards international students from this Government than was the case previously—universities tell me that they have seen that. We will continue to welcome international students, not only because of the finance that they bring but because of the benefits to students and our role in the world that come from that. I think I have already covered the point about value for money, which we are absolutely committed to ensuring.