Higher Education: Funding

Baroness Falkner of Margravine Excerpts

Wednesday 27th October 2010 Lords Chamber

[Baroness Falkner of Margravine]

My Lords, I declare an interest as chancellor of the University of Northampton. I also benefit from the remunerative employment of my spouse at the London School of Economics. I congratulate the noble Lord, Lord Boswell of Aynho, who, as MP for Daventry, was a steadfast friend of the University of Northampton. His maiden speech demonstrated that he is as trenchant as ever. We look forward very much to hearing his future contributions.

We find ourselves at a critical juncture in the future of higher education in England. The excellent debate that we have had tonight nevertheless feels somewhat unreal in the sense that one imagines that all has been well with the funding of higher education until this point. We know that this has not been the case for at least a generation. When a fully state-funded system moves from catering for the needs of 10 per cent of the population to those of nearly 50 per cent of the population over some 30 years, it is inevitable that questions will need to be asked about who pays for this. It is also evident to me that it could not possibly be defensible that those whose children will not avail of this opportunity should still be asked to pay for the mainly middle-class students who benefit from a university degree. It is both inequitable and regressive for general taxation to be used to benefit a particular section of society; to paraphrase the Prime Minister, those who have sharper elbows than others.

This is not to deny the overall benefits to societies from universities, but simply to point out that it is taken as given—hence the continued financial support from the public purse, albeit reduced, that the review recommends. There is little doubt in the current economic climate that the current system of capped income-contingent loans is inadequate to meet the funding requirements of universities and their students in order to maintain excellence. There is no doubt that the current economic climate has led to a more radical set of options being suggested in the Browne review. This has also been helped by the emerging consensus among most of those involved in higher education that tinkering at the edges is no longer feasible and that smaller cuts to HEFCE funding, combined with another increase in the income-contingent loan scheme, would neither meet course costs nor somehow put off the requirement for universities to have increased funding. So the options left on the table were to have a graduate tax or to follow through with the proposals of the noble Lord, Lord Browne, for a graduate earnings contribution. Several noble Lords have spoken about the challenges posed by a graduate tax as well as its inherent inequalities, so I will not repeat those views.

I turn to the proposals of the Browne review. I start by congratulating his panel on having achieved a balance between equity, quality and sustainable funding. Like most reviews, in answering questions it also raises a number of fresh ones, which I hope my noble friend the Minister will be able to answer in her response tonight. While society is undoubtedly strengthened by the expansion of higher education, I accept the principle that those who benefit financially from an optional life choice, which is what a university degree is, should bear the bulk of the costs of that choice.

I shall speak about the concerns expressed about the utilitarian nature of these proposals. As someone from an ethnic minority who speaks to numerous disadvantaged students from ethnic minorities, as well as to those who are not, I want to share with the House the idea that many young people have aspirations to be financially independent through employment. They look to their degrees to get them a job that will enhance their positive freedoms—the “freedoms from”. The idea of the longer-term benefits of sagacity and intellectualism are not foremost in their minds when they are 18 and contemplating the rest of their lives. Utilitarianism has its role as well, alongside the ivory towers.

I also welcome the expansion of places and of the funds following the student. In the past few years we have seen a situation where able students have been prevented from fulfilling their aspiration for a university degree because HEFCE’s control of the number of funded places has prevented them from going. The review estimates that there were some 20,000 to 30,000 qualified applicants who were unable to obtain a place over the past five years. It cannot be right to have a random lottery that tells you that you have met the criteria for entry but you cannot go this year, and perhaps not even next year, as there is a cap on numbers driven by budgetary constraints.

I turn to the other welcome development: the availability of funding for part-time students. I went to university later in life and obtained degrees through both full-time and part-time courses. Nevertheless, I worked throughout my undergraduate and postgraduate degrees. The most difficult aspect of this was finding the funding up front when doing my master’s. Most part-time students who are not on employer-funded courses need to build up a nest egg to see them through the two-year or three-year commitment that they make, just to cover their living costs. The additional burden of having to take out a commercial loan to pay for up-front fees provides an incentive to chuck it all in and go full-time to take advantage of the option that full-time courses currently offer of deferring payment till later.

The sustainability of university finances has been an on-going theme for my generation. We in Britain take great pride as a nation in featuring well in international league tables and in counting the number of Nobel laureates that our research institutions produce, yet at the same time we cultivate a culture whereby students, academics and indeed the governance of our institutions can somehow be delivered by muddling through. I am glad that the noble Lord, Lord Browne, has dispelled the notion that our university budgets can continue to be trimmed without any impact on teaching standards or research excellence.

In plain English, the review attempts to provide the best possible education at the lowest possible price, hence the lifting of the cap on fees to allow individual institutions to charge what their students will bear. I would therefore be dismayed if the backbone of the review—removing the cap and allowing a market to develop—were to be abandoned for the lowest-common-denominator position of a fixed, yet higher, fee; it would meet the demands neither of students nor of universities. I also say to my noble friend Lord Smith of Clifton, who I see is back in his place, that a cap would ensure that those elite institutions that he was worrying about, such as the LSE and Cambridge, would indeed go private.

Alongside this uncapping is an essential corollary: that those charging over £6,000 will have to return a proportion of the additional income to the Treasury on a sliding scale. These levies are to be used to offset the costs of education for those who will be earning under the threshold and hence will require a subsidy. This is a progressive response to a significant challenge, as it will also put an onus on those charging higher fees to improve access. I hope that the Government will resist calls for a cap, which to date has plainly been seen to be unworkable.

My final point concerns the improvement of access. I welcome the proposals in the review for improved guidance for pupils on the benefits of higher education and for informed support to ensure that they are able to make the best choices of courses in line with their aspirations. The review proposes that the UCAS portal will allow pupils to compare courses and their relationship to employment options after one year of graduating. I wonder if this is not too short a timeframe for assessing the success or otherwise of your future degree. Will the Minister consider a longer timeframe, monitoring the progress of a graduate in employment for perhaps three years to give a better picture of the future? This would help school-leavers making difficult decisions.

While the review has detailed how the service in schools may be professionalised, will the Minister explain how older part-time students might also be similarly assisted? The UCAS portal will not be directed at them but their investment is as deep, if not more so.

On widening participation, I also urge the Government to go further than the review and consider making the first year free for all those pupils who have been recipients of the pupil premium. There is also the on-going question of how students from disadvantaged backgrounds might be encouraged to enter the elite institutions. The Sutton Trust research shows that around 3,000 pupils with results at GCSE and A-level that would enable them to attend elite institutions do not apply; the noble Lord, Lord Browne, mentioned that himself in his speech. The review also points out that these institutions spent some £400 million in 2009-10 in trying to improve access yet, perversely, the review leaves it to institutions to determine how they might improve access in the future when OFFA is subsumed into the superquango, the Higher Education Council. It is curious that the Higher Education Council will also be the adjudicator of appeals. The importance of independence for both an access regulator and an appeals adjudicator is significant, and I hope that the Government will consider that carefully.

The proposals are far-reaching and radical. As one who has sat through numerous debates in this House over the years, listening to noble Lords despairing about the quality of education as well as the reductions in funding for universities, I am convinced that the time has come for a radical, progressive and lasting solution. If the Government consider the proposals carefully, blunt their rougher edges and come back with the fundamentals nevertheless intact, we will have gone a long way towards an equitable solution for funding high education.