Higher Education: Affordability and Quality

Baroness Deech Excerpts

Thursday 2nd July 2026 Lords Chamber

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[Baroness Deech]

That this House takes note of the future affordability and quality of higher education.

[Baroness Deech (CB)]

My Lords, I declare an interest as a former Independent Adjudicator for Higher Education and principal of St Anne’s. Let me say at the outset that our universities are a brilliant global asset and, in order to carry out the innovation and research that they do, they must be free to be elite and not be held back by manipulative regulation or excessive preferential diversity targets. In my maiden speech 20 years ago, I pointed out that it was taken as axiomatic that students see themselves as consumers, with rights and outcomes, mainly that higher education is mostly about higher earning power over a lifetime. I begged to differ.

I understand this quantifier now, because the burden of loan repayments is so heavy, but it remains true that HE is not simply about equipping students with skills for employment. It involves unmeasurable assets which add up to a public benefit: induction into citizenship, leadership and employment, instilling ambition and motivation, the ability to savour work and leisure, independence of thought, intelligence and intelligibility, having a stake in the future and control over one’s destiny, and an informed interest in politics. The difficulty in gaining employment is not a weakness of HE; it is the result of this Government’s own policies and the expectations of arguably too many graduates.

Studies show, none the less, that only 8% of graduates regret going to university, and far fewer of them are out of work than in the non-university population. The quantity of a graduate salary should not be taken as a marker of success. Counting success by salary level undervalues the public good of teaching, nursing, social work and the arts—traditionally not so well paid. I profoundly disagree with the ranking of subjects according to how much graduates will earn, with creative arts at the bottom of the table. Is it seriously considered that creative arts, one of the glories of our culture, are to be axed because students will, and they know it, be precarious wage earners?

In sum, the sector faces a significant funding and quality crisis. Without sustainable funding and the maintenance of the standards which have put Britain at the top of the international league, there will be closures, further reliance on international students, who may well find that what they came here for no longer exists, a revolt against fee paying and loans, and lower research input and success.

The Government’s 2025 White Paper, Post-16 Education and Skills, categorises courses rather than institutions. Noble Lords should also read the Policy Exchange report, Tarnished Towers. I propose fewer universities, with a type of return to the former division of universities and polytechnics, and a fee differential. As an aim, I suggest that outstanding quality and differential are to be valued, in contrast to the universality of admission and outcome grades that we have at the moment.

There are some lessons to be learned from Europe. There, lower-ranked universities supply teaching and training and make contracts with local industries. Nearly all have far fewer luxury facilities and buildings than British universities. The pay of staff and leaders in Europe is about one-third that of their UK counterparts and ranks with civil service pay. I urge emulation of the ratio of European university leaders’ salaries, where they earn no more than three or four times what ordinary lecturers get, whereas here it is 13 or 14 times more, a ratio that destroys loyalty and replaces it with distance.

In Europe, grants are more often for living costs than tuition. This is excellent because, as the Sutton Trust has shown, social mobility is achieved here by students leaving home to mix with others who have the same ambitions and where the course is the best in their subject, rather than having to stay at home and going to the local university. The White Paper is right to reintroduce maintenance.

Our great quality is under threat. This is due to the low admissions requirements, the inflated degree results and the lack of data about or requirement of student input. The proportion of Firsts, which is 30%, and 2.1s awarded by each institution should be capped. The National Student Survey asks detailed questions about the education provided to the students and their opinion of it. It asks nothing about how much work they do and whether they have done it as required and on time; in other words, they are treated as passive consumers. The OfS is right to consider the credibility of the inflation of Firsts and Seconds, which does nothing to help employment prospects and contributes to the number of students complaining to the authorities that they have not received the grade they thought they were buying or that they should have received, if their disabilities were taken into account.

The figures about entrants’ lack of qualifications are shocking. Some 8% of UK undergraduates starting in 2024 had no formal qualifications and 75,000 students did not have a single A-level. This lack is concentrated in certain universities, which, I suggest, are ripe for transition to distance learning and skills provision. Ravensbourne, Bath Spa and Leeds Trinity took in more than 60% of students without qualifications. I recommend national entry qualifications; I leave aside mature students. There is a decline in standards of admission and assessment for both undergraduate and master’s degrees in response to many universities’ dependence on foreign student fees and pressure to widen access and close performance gaps in favour of students from disadvantaged backgrounds.

Some universities should transition to being different, low-cost digital institutions, making use of AI learning or merging with further education institutions. This may make room for higher grants for higher-quality institutions. Places should be gradually reduced, student loans tailored, and foundation years and access schemes reviewed for their worth. The OfS has the power to downgrade—although I would not call it that—an institution, or the institution can change itself into a different one.

As the White Paper acknowledges, international students are as much a problem as a benefit. I have no doubt that international students who come here for graduate work are not a problem: they have already proved themselves and are likely to be funded by external sources and collaborating with established colleagues here. So I welcome the Government’s global talent fund. However, universities are far too dependent on international undergraduate student fees. If China, for example, were to reverse its policies—or, as is already happening, the Chinese student-age population reduces and China’s own universities are doing so well that they might even attract non-Chinese students—the financial consequences here would be clear.

It is time for our universities somehow to wean themselves off that reliance, not only for the reasons I have given but because of the integration problems. I know from my time dealing with complaints that some foreign students felt that they were cash cows. They were not given orientation, they clustered together, their English was not good enough, and they had visa and funding problems, and so it was difficult to integrate them into academic work for those reasons. International students have long been overrepresented as complainants to the Office of the Independent Adjudicator. It is also possible that the entry regulations are being abused by those who seek to remain here rather than study in the short term.

I agree with the Policy Exchange recommendation that there should be a cap of 30% foreign undergrad students at each institution. We have universities in the top 35 of the world league tables, and the European Union has none. It is also the case that this top quality brings many more foreign students here than British ones going abroad, where, in my experience, they were disappointed by the lack of pastoral care and face-to-face contact with lecturers. So I am wary about giving any loans to international students as the record of repayment is very bad. They should, of course, pay full fees. Now that Erasmus is being restored, the cost to our Government will increase, because it has always been the case that three times as many overseas students came here as ours who went abroad. The Government have proposed an international student levy, which seems a good idea. However, there are complex issues, given that the number is likely to reduce in any case, while the attractiveness of the UK will remain.

The loans system is a real blot on the landscape. The average student debt is over £47,000. Most graduates will never repay it in full—and if they do, it can take 31 years. Those fees are insufficient in any case. The balance is £492 billion, and less than one-third are likely to repay. The issue is the high levels of unemployment undermining the repayment aim. The scheme is complex and not at all understood by the teenagers who sign up to it without full knowledge or understanding. Unbelievably, they may end up paying more than they borrowed, over decades, with shifting rules. The interest rate is excessive. It pushes graduates into very high tax rates, and it is a regressive system. They see it as a tax on ambition. The way out for women is to get married right after university and not work.

I predict that the outstanding debts will have to be written off sooner or later. After weighing it all up, I have concluded that the way forward is indeed a graduate tax for several decades. It is relatively simpler and easier to understand, avoids huge debts and can be progressive. Still, we should await the report of the Treasury Committee inquiry into the scheme.

I cannot leave this topic without looking into freedom of speech, which lies, or should lie, at the heart of higher education. There was a fight for centuries over freedom of speech in all arenas—freedom from religious domination. Just as it seems to have been won, there have re-entered a new religious repression, gender issues and racism. Because of the misuse of human rights and loss of liberal leadership, respect for divergence, curiosity, courage and tolerance is vanishing. This is a serious rot at the heart of the system. Universities have failed to uphold free speech and have tolerated extremism and antisemitism—which I have spoken about many times here—as if they are frightened of their students’ excesses. The OfS must take this on if the vice-chancellors will not.

The Government have finally implemented the complaints process for freedom of speech complaints, as mandated in the Higher Education (Freedom of Speech) Act 2023 so long ago. The jurisdiction is rather awkwardly split between the OfS and the Office of the Independent Adjudicator. The latter can deal only with students, and then only after the university’s internal procedures have been exhausted. The OIA would look to see whether the university’s procedures have been followed, not at the substantive issue of whether freedom of speech was actually threatened and whether it was permissible. The Office for Students, on the other hand, will deal with academics, staff, external speakers and student unions, and has more substantive enforcement powers.

The danger with both is that they may be too slow. After all, if a free speech issue manifests itself in May, the students and others will be long gone by the time there is a decision, and the costs will be high. There is no mechanism for immediate injunctive relief so, unless university authorities show muscle, we can expect more of the crowd and intimidation tactics that stop a speaker in his or her tracks.

It is time for an overhaul, with fewer, more diversified universities, more skills and technical ones, and a lifelong learning entitlement, and of quality of admission and grades, with caps on numbers, with the courage to deliver quality and free speech and to tell the world about the public good that our excellent system delivers. Will the Minister push for fewer, recategorised universities; capping Firsts and Seconds; the National Student Survey asking students how much work they have done; a national entry qualification; and a cap, even on undergraduates? Will she reconsider a graduate tax to keep our system at the front of the world, as it has been for so long?

--- Later in debate ---

[Baroness Deech (CB)]

My Lords, this debate has sounded the alarm to the Minister and the department about what is going on in our universities. In fact, ever since Prime Minister Tony Blair, the attitude of successive Governments has been somewhat “light the blue touchpaper” in relation to numbers and “stand back and see what happens”.

There is a real crisis, and the fact that we have gathered this afternoon such a galaxy of leading academics of this country is in itself a tribute to the effect of higher education. In fact, there are dozens of other Members of the House—maybe more than that—who could not be here this afternoon but who are also the most distinguished academics. However, I hazard a guess that many of them, like me, and as the noble Lord, Lord Liddle, said, benefited from free tuition, maintenance grants and a smooth passage through higher education.

Not least of our luminaries in this House is the noble Lord, Lord Rees. If ever there was an exemplar of scientific research at the highest level, recognised around the world, it is him, and it is a privilege that he sits here. I think he stands in himself for a more flexible attitude to higher education, less of a division between humanities and science, and the contribution that scientists can make to the general well-being of the country. We should learn from that and adopt a more flexible approach, whether it is allowing students to have more of a mixture of subjects or turning some universities into places that offer a different sort of learning, or even over a shorter time. I would call the noble Lord, Lord Rees, the CP Snow of our age, because that is what he has expressed to us in his time here.

There were some disagreements among us, but I think there has been very broad division on the fact that AI needs careful attention, as the noble Baronesses, Lady Finlay and Lady Cash, and the noble Lord, Lord Tarassenko, said. Many of us agree that salary is not the main issue. How many of us said to ourselves, “What’s the salary going to be?” when we went to education? I am sure we did not say that. When I was choosing students at admissions and said to them, “Why have you chosen this subject?”, if they said to me, “Because of the salary”, I can assure your Lordships that it would have been an immediate thumbs-down. It is the morality, as the right reverend Prelate said, and the personal qualities that are drip-fed into you by those precious three or four years, and many of us have agreed on that—the noble Baroness, Lady Freeman, and others.

As people spoke, I was thinking, “Is it not such a good thing now that members of the Royal Family go into higher education, and even the women?” That was not the case so long ago. The values of higher education will indeed show themselves out in the attitudes and benefits that the Royal Family can bring to us.

Access remains important. I agree with the noble Baroness, Lady Warwick, who herself did so much for the higher education sector, that access is important, but, putting it rather crudely, I think access should now swivel to class rather than ethnicity. I think the problem is with poor students, especially poor white students, rather than focusing all the time on diversity of ethnicity.

As I have already mentioned, research is vital. We led the way with the Covid vaccination and AI. Unless research is supported, as the noble Lords, Lord Patel, Lord Bew and Lord Stevens, and the noble Baroness, Lady Finlay, said, Britain will sink back. Our research is world beating and it benefits us personally.

Freedom of speech has been a passion of mine for a long time. I was pleased to hear the noble Lord, Lord Verdirame, and the noble Baroness, Lady Cash, express their anxieties. It is something that we absolutely must all promote, lest our universities sink down.

Student loans remain a real problem. I confidently predict that they will topple over and the whole system will not survive. It cannot. Something else will have to take its place. My bet is on some form of graduate tax. One can see student loans becoming unaffordable and the debt to the country mounting up and being a deterrent.

We are all keen to see the arts flourish regardless of salary, and we hope that the Government will recognise that. We need to see vocational education flourish, whether through apprenticeships or different types of universities, as the noble Lord, Lord Trees, said, so there is much that unites us. I remain troubled about international students as they will be a great cost to the system, especially if, as was formerly the case, three times more EU students come here than our students go there, and they are not paying their full whack and not repaying. That is a real problem.

We have a wonderful system. All of us here implore the Minister to listen to what the academics here have said and to preserve that system with special attention to the arts and the fragility of the loan system.

Motion agreed.

House adjourned at 5.42 pm.