Higher Education (Fee Limits and Fee Limit Condition) (England) (Amendment) Regulations 2026

Baroness Blake of Leeds Excerpts

Tuesday 17th March 2026 Grand Committee

Moved by

[Baroness Blake of Leeds]

That the Grand Committee do consider the Higher Education (Fee Limits and Fee Limit Condition) (England) (Amendment) Regulations 2026.

Relevant document: 51st Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)

[Baroness in Waiting/Government Whip (Baroness Blake of Leeds) (Lab)]

My Lords, unfortunately, my noble friend Lady Smith is unwell, so I shall speak to the draft Higher Education (Fee Limits and Fee Limit Condition) (England) (Amendment) Regulations 2026. To begin with, I should take this opportunity to explain that within the Explanatory Note there was a discrepancy, in that the percentage increase for 2026-27 was stated as 2.7%, whereas it should be 2.71%, and the percentage increase for 2027-28 was stated as 2.8%, whereas it should be 2.68%. I can reassure Members that a correction slip has been arranged.

I thank the Secondary Legislation Scrutiny Committee for its scrutiny of the draft regulations. This statutory instrument, which was laid in draft on 5 February, will increase the limits on tuition fees that higher education providers can charge students studying undergraduate courses at approved fee cap providers in the 2026-27 and 2027-28 academic years. The SI preserves the fee limits for lower-fee foundation years at 2025-26 levels for 2026-27 and 2027-28. A separate SI making changes to maximum fee loans and student support for the 2026-27 academic year was laid before the House on 12 February.

As many Members have previously acknowledged in this House, our higher education sector is one of our country’s most valuable strategic assets, one that we should feel proud of and endeavour to protect, so that future generations of students can continue to benefit from it. Our higher education sector is admired across the globe. International students from all over the world choose to study here, making an enormous contribution to the sector, to the economy and to society as a whole. Our universities are home to world-leading research across a broad range of sectors including clean energy, digital technologies and life sciences.

The Government have set out a clear vision for the future of the sector in the Post-16 Education and Skills White Paper—a vision for a sector that drives economic growth, delivers a world-leading, high-quality experience for all students, provides national capability and increases the UK’s international standing, while also delivering regional impact for everyone who lives in this country.

There have been countless examples heard in this House about how providers are anchors in their communities, helping to break down barriers to opportunity, supporting local businesses, strengthening social cohesion and delivering important local jobs as well as outreach. Higher education providers transform the lives of the students who attend them, not only by enabling them to boost their incomes and progress in a career that they choose, but by enriching their lives through new experiences and allowing them to develop life skills, grow their networks and experience new perspectives.

However, this House has spoken at length about the challenges the sector faces. A growing number of providers are facing financial challenges. Analysis from the Office for Students from November 2025 suggests that, without mitigating action, 45% of providers could face a deficit in 2025-26. Indeed, English providers are contending with a number of financial pressures, one of which is the £1.7 billion aggregate loss on domestic teaching and the need for providers to draw on other income to cover it. Such challenges have been unaddressed for far too long, and seven years of frozen tuition fees plus overly optimistic strategic and financial planning and potential issues with governance have contributed to the financial challenge facing providers.

The Government took the immediate action needed and responded by increasing fee caps for the 2025-26 academic year and by also making reforms to the Office for Students. But the Government must go further to ensure that our higher education sector is put on a secure footing, to allow it to face the challenges of the next decade and to ensure that all students receive the world-class education they deserve. Government and the sector have a shared interest in fully realising the benefits of higher education for students, taxpayers, the economy and wider society. Government has a responsibility to ensure that the higher education sector is suitably funded, and the sector has a responsibility to ensure that it delivers the best value for students and maximises its contribution to our economy and society.

This SI is intended to put our higher education sector on a more secure footing and provide greater certainty over future funding, so the sector can focus on delivering quality provision. It will mean that, for the 2026-27 academic year, from 1 August 2026 onwards, tuition fee limits for undergraduate courses will increase by 2.71%, and for the 2027-28 academic year, from 1 August 2027 onwards, by a further 2.68%, in line with forecast inflation, based on the RPIX inflation measure. This means, for example, an increase from £9,535 to £9,790 for a standard full-time undergraduate course in 2026-27, and an increase to £10,050 in 2027-28.

Increasing fees for the next two academic years will mean that providers have greater certainty and can focus on delivering the Government’s ambition for a more specialised and more efficient sector that is better aligned with the needs of the economy. This will provide long-term certainty over future funding for the sector. We will then legislate, when parliamentary time allows, to increase tuition fee caps automatically for future academic years. These annual increases in fees, linked to inflation, will balance the need to give the sector stability with fairness to students and taxpayers.

I understand that this may raise concern about the affordability of higher education for students, but the Government are committed to ensuring that higher education is open to all who have the ability and desire to pursue it. The student finance system removes upfront financial barriers and provides additional support to those with the greatest needs, so that higher education is open to all. The Government are already making improvements to the student finance system that we inherited. To help students from disadvantaged backgrounds progress and excel in higher education, the Government are reintroducing targeted, means-tested maintenance grants of up to £1,000 per year, from academic year 2028-29. The Government have also committed to future-proof our maintenance support offer by increasing loans for living costs with forecast inflation every academic year from 2026-27 onwards.

The OfS has consulted on its future approach to quality. It will continue to hold providers to account for the outcomes that they achieve for their students, and this Government will ensure that only high-performing providers are able to charge the top rate of fees. Eligible students can continue to apply for upfront fee loans to meet the full cost of their tuition.

It is also important to remember that student loans come with a range of unique protections designed to support borrowers throughout the lifetime of the loan. Unlike commercial loans, student loan repayments are calculated solely on a borrower’s earnings, not on the amount borrowed or the rate of interest applied. Any outstanding balance, including interest, is cancelled at the end of the loan term, with no detriment to the borrower, and student debt is never passed on to family members or descendants.

The Government’s ambition is to have a more sustainable, more specialised and more efficient sector, which aligns with the needs of the economy. It is vital that higher education continues to contribute to closing the gap between people from disadvantaged backgrounds and their peers. The Government want to recognise each provider’s unique contribution and encourage them to capitalise on their comparative advantage. The Government are not going to force this specialisation; it is clear that the diversity of the sector is a strength, but each provider needs to be clear on its distinctive role in the system and move away from a one-size-fits-all approach. Each provider needs to be well run, collaborating with others to deliver the best value for students, and to operate as efficiently as possible.

In December, the Government announced reforms to the research excellence framework—the REF—to ensure that it better supports curiosity driven research, government missions, industrial strategy priorities, innovation and commercialisation. It will also reduce administrative burden and encourage greater collaboration and specialisation across universities. At the same time, the Government will protect and grow quality related research funding and redirect some UKRI funding toward areas of strategic national importance, while addressing sustainability challenges in the sector.

To conclude, this SI will put our higher education sector on a more secure footing, enabling it to continue to deliver the world-class higher education that current students and those in future generations deserve. I beg to move.

[Lord Mohammed of Tinsley (LD)]

My Lords, as we heard from the Minister, the purpose of this statutory instrument is an increase in tuition fee limits, indexed to inflation. The Minister has presented this as a technical adjustment that is necessary to maintain financial stability in our higher education sector. However, we must be clear: there is nothing merely technical about increasing the cost of accessing education. This is a decision with profound consequences for students, social mobility and the very character of our universities.

We recognise the genuine financial pressures facing higher education institutions. Years of frozen fees, rising costs and uncertainty over overseas students have created a challenging environment. Universities must be properly funded if they are to continue delivering world-class teaching and research. However, this instrument places the burden of that funding disproportionately on students, many of whom are already carrying significant debt and facing difficulties during this economic downturn. Our position is clear: we cannot support a policy that increases fees without wider, fairer reforms of higher education funding. Simply uprating fees by inflation risks entrenching a system that is already failing too many. It does nothing to address the long-term sustainability of the sector, nor does it tackle the inequalities faced by students from disadvantaged backgrounds.

Moreover, this approach lacks ambition. Many will ask, “Where is the comprehensive strategy for higher education? Where is the consideration of alternative funding models, maintenance support and lifelong learning?” Piecemeal adjustments such as this do not meet the scale of the challenge before us. There is a question of timing and fairness. At a moment when students and graduates are grappling with the cost of living, and when young people are questioning the value and affordability of higher education, this Committee should be wary of endorsing measures that risk further deteriorating participation.

In that spirit, I ask the Minister three questions. First, what assessment has been made of the impact of these increased fee limits on the participation of students from lower-income backgrounds? Secondly, can the Minister set out whether the Government intend to bring forward a comprehensive review of higher education funding—and, if so, when—rather than continuing with the incremental adjustments? Thirdly, what consideration has been given to increasing maintenance support alongside these fees changes to ensure that students are squeezed no further by the cost of living?

We must not accept a false choice between underfunded universities and overburdened students. By the way, I should declare my interest, as I have done on several occasions previously: my daughter is in the first year of her degree at Sheffield Hallam University, so she may well be impacted by this change.

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Universities are vital national institutions. They must be financially sustainable—that is clearly correct—but sustainability cannot be achieved by continually loading more debt on to young people while offering no meaningful reform in return.

[Baroness Blake of Leeds (Lab)]

My Lords, I will respond to the comments of both noble Lords together, since they raised similar, although not identical, themes. I thank them both for contributing to today’s debate. Of course, this is an exceptionally topical subject, on which there have been three OQs recently in as many weeks, so it has been much highlighted.

I reiterate the importance of the SI for putting our higher education sector on a secure footing and providing greater certainty over future funding. Obviously, we have heard many views today and previously about the importance of the sector, not only for students themselves but for economic growth, world-leading research and the contribution that it makes to communities. I do not want to dwell on this, but I have to wonder at the comments of the noble Earl, Lord Effingham, given the lack of action from the previous Government, when it was clear that the higher education sector was heading into very difficult circumstances yet there was no sense of commitment.

I emphasise that running through all our work on this is fairness and sustainability. There needs to be fairness to all students who apply, by making sure that access is open to all—a point which perhaps both noble Lords did not emphasise enough. To too great an extent in the past, family wealth and ability to pay were hugely determinative in whether young people went to university. This Government have made the commitment that we will make sure that quality education is open to all.

On that issue of quality, which both noble Lords raised, I again emphasise that the UK higher education sector is a world-leading sector in our economy that creates opportunities and supports local communities. But, as both noble Lords rightly said, we have to make sure that we root out any low-quality provision wherever it may exist. That is why the Office for Students has driven forward significant regulatory reform in recent years, strengthening its regulatory tools, holding higher education providers to account for the quality of their provision and investigating where there are risks to the students’ best interests.

We are determined to ensure that higher education providers go further in giving their students the best course, making sure that they work individually but with links to employment outcomes and to our industrial strategy, by ensuring that student destinations are a factor in considering providers’ performance. Sir David Behan’s independent review highlighted that, and we are working through the recommendations in supporting institutions to implement a more integrated quality system through the teaching excellence framework. The aim is for a regulatory approach that combines tackling poor quality with a greater focus on driving continuous improvement for all registered providers.

To answer the noble Lord’s concerns, that approach will be proportionate and will reward the highest-quality provision. That was clearly laid out in our Post-16 Education and Skills White Paper. In the future, the Government plan to make fee uplifts conditional on providers achieving a high-quality threshold through the OfS’s new quality regime.

I am also delighted to emphasise that the Government are bringing back maintenance grants and, through maintenance loans, helping undergraduates from the most disadvantaged backgrounds to progress and excel in higher education. The Government will future-proof the maintenance loan offer by increasing loans for living costs in line with forecast inflation every academic year from 2026-27 onwards. I hope that addresses the concerns.

We are ensuring that students from the lowest income families receive the largest year-on-year cash increases in support and providing students with long-term financial certainty on the financial support they receive while studying. Maximum loans will rise by 2.71% across 2026-27. In addition, vulnerable groups of students who are eligible for benefits—such as lone parents, some disabled students and care leavers—are all exceptionally important and we must make sure that we support them. I am delighted that many local authorities, as well as universities and other institutions, are looking at how they can further support disadvantaged students.

The noble Earl, Lord Effingham, raised the issue of repayments. I reassure him that, when it comes to students repaying their loans, their monthly repayments will not increase because of the changes to the fees or maintenance support. Student finance works very differently from standard consumer lending. Repayments are determined solely by a borrower’s income rather than the total amount borrowed or the interest that accrues. Those earning below the repayment threshold will make no payments at all. At the end of the repayment period, any outstanding balance—including any accumulated interest, which I mentioned earlier—will be cancelled in full.

We have to be realistic: we inherited a terrible fiscal situation and some of the decisions we are making are tough but necessary to protect both taxpayers and students. On the question about the review, there is a continuous review into student finance to ensure that it remains fair, sustainable and supportive of students from all backgrounds. I know there is a lot of interest in this area at the moment, so I reassure noble Lords that these matters are constantly under review. I cannot be more specific about where we may go.

I think we have agreement across the Grand Committee that the higher education sector is one of the country’s most valuable strategic assets. We need to protect it on behalf of the institutions themselves, while making sure that future generations of students can continue to benefit from it. The system of course has financial challenges but, despite that, the number of students from disadvantaged backgrounds has not diminished as was feared. That is due, I think, to the extensive work in engaging with them to make sure that they feel that the courses on offer are for them. We know that seven years of frozen fees have contributed to a significant real-terms decline in providers’ incomes. I hope that that addresses the noble Earl’s concerns.

The Government and the sector have a shared interest in fully realising the benefits. The Government have already taken decisive action to boost income, as I have outlined. We of course need to do more. We need to keep reviewing this and making sure that stability runs through this very important sector. However, to be absolutely clear again, the Government continue significantly to subsidise the HE system. In addition to the subsidised fee loans provided to students last year, the Government also provide support to world-leading research. That is why this statutory instrument will increase, for a further two years, the limits on tuition fees that higher education providers can charge students studying undergraduate courses. With those comments, I commend the regulations to the Grand Committee and hope to get approval from other noble Lords.

Motion agreed.