Higher Education (Fee Limits and Fee Limit Condition) (England) (Amendment) Regulations 2025

Baroness Barran Excerpts

Monday 3rd March 2025 Grand Committee

[Lord Storey (LD)]

It always seemed to me that were almost gloating about this, but what a fine way to show that in the financing of our university sector, or in how we look after our students in many cases.

As I think has been said by the noble Lord, Lord Willetts, last year the Minister very bravely said the Government were going to increase tuition fees to get over that difficulty. Then, of course, along came national insurance and all that wonderful extra financial resource is completely lost.

My knowledge of the university sector has increased over the years with my children going to university and I also served on the governing council of Liverpool Hope University, so my interest has grown. I always think that we do not really grapple with some of the issues that face us; we try to push them away. I thought that when loans were introduced, it would put students in the driving seat of a university education. I do not think that has happened. In some universities, the way students are regarded is not as good as it should be.

I also wonder whether Tony Blair saying he wanted 50% of young people to go to university was the right way of deciding how we grow the university sector. I look now, and I see some universities really struggling, offering very low grades to get into university. I see universities almost competing with each other on courses when they are in the same city, for goodness’ sake—I just do not understand that. I look at private universities, which, obviously, get finances from the system. I was heavily involved in the Greenwich School of Management, where the Government were able to say, “We’re taking all these young people from deprived backgrounds and giving them a university education”—but, at the end of the first year, they took the money and ran. What went on in that particular private institution, along with others, was completely wrong. When it was highlighted on “Panorama”, the college was closed down, along with others. In one case, police took action. So we have to look carefully at how we use the money as well. Some of the practices that we currently carry out are, in my mind, just not acceptable.

I want to see students really value their university education. I will give an example of something that is a great pity. When I was at university, I stayed on Merseyside, but I loved the fact that I met people from all over the country, who are some of my best friends—from the north-east and elsewhere. Nowadays, students cannot afford that and, increasingly, they go to the university in their home area or even their home city. The figures for Liverpool John Moores or the University of Liverpool, for example, increasingly show that the students come from that city, that conurbation or that region. We have lost something in losing that opportunity.

I am delighted that the Minister talked to us about how we need to look at this properly and come forward with some proposals in the summer. I am delighted and excited by that, to be quite honest, but I hope those proposals will give us the opportunity to give our ideas and thoughts on what that might be. But, in terms of this SI, I very much support what the Government are doing.

[Baroness Barran (Con)]

My Lords, as we have heard, this statutory instrument increases by 3.1% the maximum tuition fees that higher education providers can charge for the majority of courses and, in turn, the amount of tuition fee loans that students can take out. It also reduces the maximum amount of tuition fees that can be charged for foundation year courses in certain classroom-based subjects, such as business studies, humanities and social sciences. These Benches very much welcome the Government’s decision on foundation year courses; we have seen potentially troubling increases in the number of students taking these courses, particularly where franchise providers are used to deliver them.

However, I have three main concerns about the approach that the Government are taking to the tuition fee increases. First, this increase, in line with inflation, sets a precedent for future fee increases. I absolutely hear the points made by the Minister and my noble friends about the importance of giving universities visibility and stability in their financial model. But if we assume, in line with the OBR, that inflation remains at around 3%, it will take only a further two years of this policy before students will have to pay more than £10,000 a year in fees. So, after a typical three-year degree, students will leave with debt of around £59,000, or up to £68,600 if they live in London. Echoing the requests of my noble friends, I ask the Minister to clarify whether the Government plan to increase fees again in this Parliament in line with inflation—taking my noble friend Lord Johnson’s advice and doing that quickly—or is this a one-off decision?

Secondly, the Government have stated that they increased university fees for 2025-26 to

“help cement higher education providers’ roles as engines of growth in the heart of communities”.—[Official Report, Commons, 20/1/25; col. 19WS.]

The Secretary of State for Education deemed that this action was necessary to

“secure the future of higher education”.—[Official Report, Commons, 4/11/24; col. 47.]

However, as we have heard from all speakers this afternoon, this increase will not result in a net improvement in university budgets; indeed, the Secondary Legislation Scrutiny Committee commented in its report on this SI that the increase will “not reduce those difficulties” that higher education providers are facing. Our understanding is that the Government’s choice to increase employers’ national insurance will cost the university sector around £372 million, which will more than offset the increase in fees. So we are left in a situation where the Government have increased costs for all parties—students and taxpayers—without fixing the root of the problem. Indeed, the Secondary Legislation Scrutiny Committee noted that

“the ultimate costs of increases in tuition fee loans (and presumably also of maintenance loans, for the same reason) fall on the public purse to a significantly greater extent than the costs of those loans overall”.

So, although the focus is on students, the committee clearly believes that, ultimately, it will be the taxpayer who picks up the bill.

Thirdly, although, as I noted previously, we very much support the Government’s decision to reduce fees on foundation year courses, again, the SLSC notes that about 12 or so institutions will be most affected by the drop in income, which it estimates—or, perhaps, the Government estimate—as being between £154 million and £239 million annually. What assessment have the Government made of that impact? Can the Minister update the Committee on it?

More broadly, I hear and respect the comments of my noble friend Lord Johnson but I think it is fair to say that, as the number of degrees has expanded, some degrees have—my noble friend does not want to use the term “value for money”; I am fine with that—resulted in the taxpayer picking up a greater proportion of the costs than was the case in the past. The IFS noted in its 2020 report that total returns from a degree will be negative for about 30% of the men and women undertaking them. I totally understand that a degree is about much more than one’s earnings power, but one’s earnings power, particularly if you come from a disadvantaged community, is not insignificant either.

So I would be interested to know what the Government are doing to try to give students greater transparency about the degree choices that they are making in terms of future employability, career options and earnings power. The Minister will know that even a degree such as maths, depending on where you do it, will end up with very different outcomes in terms of earnings. It is important for students to understand the implications of their degree choices. The latest data showed that the median first-degree graduate earnings five years after graduation were £29,900 as compared to £33,800 for a level 4 apprentice. I appreciate that they are not interchangeable; I just use that as a demonstration of the point I am making.

It has taken a freedom of information request from my honourable friend Neil O’Brien to reveal the wide variations in the share of loans that are being repaid between different higher education institutions. In some cases, we see only very small fractions of what is being loaned out getting paid back, which means that these courses are definitely not great for the taxpayer but are arguably not great for the student either, who may feel that their degree has cost them a lot but not taken them to where they had hoped to get to.