Higher Education: Financial Pressures

Baroness Donaghy Excerpts

Thursday 30th March 2023 Lords Chamber

[Baroness Donaghy (Lab)]

My Lords, I thank my noble friend Lord Knight for initiating this debate and for his comprehensive introduction. I worked as a university administrator for 33 years, and I have a pension from the USS. There were not the commercial incentives in universities when I worked there, although there would have been limits to the possibilities anyway. The Institute of Education, where I worked, was entirely postgraduate, and although heavily involved in research, there is not much money in teacher training and education. As the noble Baroness, Lady Garden, has already said, institutions with a significant proportion of part-time students—such as the institute or Birkbeck or the Open University—were always Cinderella services when it came to funding.

Universities have always had a hierarchy in funding and research grants, so I am not going to claim that some golden period of access, standards, student support systems or value for money ever existed. However, what we have now is the worst of all worlds, with tuition fees falling in value by 15%, student loans reduced by at least £1,000 since 2020-21, overreliance on overseas student fees, commercialisation threatening standards, and damaging limits on the number of training places for doctors, nurses and teachers.

Until last month, I was a member of the Industry and Regulators Committee, which has launched an inquiry into the role of the Office for Students. So, as a mark of respect to that excellent committee, I will refrain from making rude remarks about the Office for Students, tempting though it is.

My first question for the Minister is: what plans do the Government have for funding more university places for doctors, nurses and teachers? It is not a great money-spinner for universities, but it would help. It would also meet a desperate need for more homegrown doctors, nurses and teachers and reduce the need for overseas talent.

Although we know that 44% of student loans are subsidised by government and some say the system is broken, I will leave it to others to elaborate on that. However, do the Government have any plans to unfreeze tuition fees before the next general election, as this represents a substantial cut in university income, or will it have to wait until after? Do the Government propose to place a cap on the number of overseas students and compensate universities for any lost income?

I have heard noble Lords on the Government Benches deploring the fact that the student experience at university has deteriorated, but they do not seem to accept that increased commercialisation might have something to do with it. I have real concerns that there is a growing backlog of repairs and maintenance in universities and much-needed capital expenditure, which will not only impact on the student experience but will have health and safety implications for the future.

In his introduction, my noble friend Lord Knight referred to the value to local and regional areas of having a university, and I support that statement strongly. I am thinking of a town which is crying out for a higher education institution. It would provide much-needed jobs and income and transform the community. When the Government are talking about their levelling-up agenda, they might consider the transformative impact of setting up a university in such a town.

Some have said that the financial pressures might lead to the closure of some university institutions. I hope that we never have to face these dilemmas, but a worse fate would be the inexorable decline in standards throughout the whole system. We have such a lot to lose in the UK, with our deserved reputation for centres of excellence, but the uncertainties around Erasmus and Horizon funding and the inadequacy of Turing funding are already showing a downward trend in the international league tables. It was the height of irony for the Government to name the scheme after Alan Turing, a genius who was tortured by the state and whose name will now be linked to a poor-relation funding scheme.

Returning to the fall in value of student loans, I point out that the recent Education (Student Fees, Awards and Support) (Amendment) Regulations 2023 were considered by the Secondary Legislation Scrutiny Committee. It referred to a report by the Institute for Fiscal Studies stating that

“the value of loans has been reduced by more than £1,000 in real terms compared to 2020–21”.

The DfE has accepted that these proposed changes will, overall, have a negative impact for students. Although there was some mitigation via hardship funds and the Office for Students, the Secondary Legislation Scrutiny Committee concluded that

“the mitigating actions outlined by Department will not compensate for the loss in the real value of maintenance loans”.

The equality impact assessment stated that the 2023-24 uprating

“will likely lead to a further erosion of students’ purchasing power”

and that women, mature students, those on low incomes and ethnic minority students would be particularly

“adversely affected by the real term decrease in the value of the loan”.

This result will achieve the exact opposite of widening access and levelling up. Reeling off a series of one-off government funding announcements does not disguise the Government’s failure to recognise the importance of higher education.

I have run out of time, so all I can say is that I agree wholeheartedly with the comments of the noble Earl, Lord Dundee, on the importance of international co-operation between universities.