Higher Education: Funding

Baroness Morris of Yardley Excerpts

Wednesday 27th October 2010 Lords Chamber

[Baroness Morris of Yardley]

My Lords, before making my contribution, I would draw attention to the Register of Members’ Interests. I am employed by the University of York and I am a council member at Goldsmiths College. These are not easy issues. They are good issues to discuss and debate over many months and years, but it is not easy to come to a conclusion. I do not think that anyone has made a speech in which they have pretended to have the answer. These are tough issues and this is a chance to get it right, which is why this debate is so important. In that respect, I welcome the report by the noble Lord, Lord Browne, and his committee. A lot of work and consideration has gone into it, and it has presented us with an opportunity to have a long-needed debate. I shall return to this important point later, but the report goes somewhat beyond the remit that the noble Lord was given.

I welcome some of the report. The emphasis on funding for part-time students has to be welcomed. We wanted to do that when we were the Government, but we did not find the money. It will be interesting to see how the coalition Government respond. The report’s wish for the training of lecturers in terms of teaching skills and a qualification has not been mentioned. That has to be welcomed. It would bring lecturers up to date with teachers in further education and in schools.

I also welcome a simpler administration of financial support. The thought of applying for financial support at the same time as applying for a university place makes sense. Another point that has not been mentioned in the debate is that the report welcomes the continued expansion of higher education. My party set the target and expanded places in higher education year after year. There has been comment from other parties and outside Parliament that it is wrong to expand higher education to include more students. I very much welcome the part of the report that goes almost further than that and says that everyone with the aptitude to do well and to succeed ought to be able to go into higher education. I like that aspiration which supports the view that we took. The financial arrangements addressed by the report illustrate a shift. It is not just a recommendation about a higher cap. This shift opens up a new debate and it makes this report particularly important.

I shall address four points, two of which have been mentioned and a further two have not. First, this review comes at a time when students will be asked to pay more for courses, but when public investment is being lessened. That is an important difference from when we discussed this issue on previous occasions. Secondly, this is a climate in which there will be less investment in public services and in higher education.

My third and fourth points are the most important. What is proposed is likely to introduce differential fees. Although that term was often used of the 2005 Act, it did not happen. Almost without exception, everyone raised their fees to the £3,000 limit. In my view, that did not put people off applying to higher education. If you want to go to university, you and your family will do your utmost to enable you to get there. If all fees are £3,000, you will find a way of getting the £3,000. There was significant help from the Government, which was a consequence of getting the Bill through the House of Commons.

One university perhaps charging more could change the pattern of applications. Thankfully, there is no evidence that students chose not to apply for university when the fee increased to £3,000. However, a differential fee will influence the university to which students will apply. The evidence is in what happened. More university students decided to stay at home because it was cheaper. It was not because they necessarily wanted to study at the university down the road, but because it was cheaper. Students will now be offered an opportunity to secure a degree at differential costs and many from lower-income backgrounds will choose the cheapest route. In that sense, this is a different report and invites a different debate.

I have often thought—but this is more instinct than evidence-based—that the problem for students from less affluent backgrounds is not the fee, which is not paid up front, but the maintenance money; the cash to keep you going while you are on the course. This is the great divide between students from wealthy backgrounds and students from less affluent backgrounds, who find it tough because they do not get a hand out from their parents. I worry a great deal about the number of students from less affluent backgrounds who work an incredible number of hours to pay their way through university. Is the Minister concerned about the maintenance grant envisaged? Will it put an end to that discrimination in the system?

More fundamentally, as other people have said, the report makes a shift in that it adopts a market approach to finance and will allow student choice to drive the system. That means that student choice will determine the funding in the teaching grant and course provision; there will be more courses in subjects that students choose to do. By its very nature it will determine the size, and maybe even the survival, of institutions. It is easy to make an argument in favour of student choice and students driving the system; it is slightly more difficult to ring warning bells about it. However, I shall try to do so because it is an imperfect lever for driving the system.

I say this for two reasons, one of which has been explained far more eloquently by my noble friend Lady Blackstone and I am backing up what she said. First, students are not the only stakeholders in our higher education system: the economic needs of the country, the economy of every citizen, regional economics, regional economies, regional employment, regional survival and regional prosperity are all stakeholders. How can investing in skills down the road, which we do not know exist but which industries that are about to be born may need, be driven by current student choice? Cultural heritage, literature, the arts, social sciences and history were all referred to by my noble friend Lord Giddens and all are important. I am not convinced that student choice will protect all those stakeholders.

My second reason for being worried about student choice being the driver in the system is that students will consider things other than course quality. When the Minister opened the debate she said—it was no more than poetic licence but it was a nice sentence—that one of the matters students would consider was the quality of the bars. I know she is right, but I doubt whether we should have a system whereby the quality of the bar drives student choice and student choice drives the survival of our institutions in higher education. Students will choose a university for many different reasons—because it is where their friends go, where their brothers have gone, where their parents have been or where they live; whatever seems right for them. I worry about that.

The report acknowledges that there will be market failure. That is why more money has been put into STEM subjects, but it is not clear how long that funding will last. I am not sure whether the Browne report is saying that there may be market failure in the STEM subjects now but in future years we might be able to accommodate market failure anywhere else. I made a list of where market failure might appear in the near future. We could not tolerate, could we, any region of this country not having a university? One of the good things we have done over the past decade is to make sure that every region does have a university. Cornwall and Cumbria used not to have universities. Surely we could not tolerate a system where the market meant that one of our regions did not have a university. Surely we could not tolerate a system where higher education did not offer a broad range of subjects. If that is the type of civilisation we want to be, surely we could not tolerate a system where some subjects were squeezed out. Surely we would want to protect university teaching expertise that the student driver might not be delivering on. What provision is there, other than the STEM subjects, to counter market failure elsewhere in the system? If the market is driving the system, there will be failure other than in STEM subjects.

The last point I wish to make has been addressed by my noble friend Lady Blackstone and is absolutely crucial. We have a richly diverse higher education system but for the past 15 or 20 years the funding and accountability mechanisms have not always reflected that. It has meant that all universities have had to compete for the same funding streams—where the money comes from—and so every university wants to be research intensive because that is where the money is. The subjects that they are good at have not bought them recognition and they have not bought them money. I have asked myself whether the report solves that problem or makes it worse. I fear it makes it worse. It highlights that there will be money from research grants, the possibility of charging higher fees and encouragement for philanthropic giving, all of which play to the strengths of our research intensive universities. I do not mind that—I do not have a problem with it—but I value and cherish the rest of the sector as well.

We do two things: we praise the fact that over the past few years we have more young people from non-traditional backgrounds going to university; and we bemoan the fact that they have not gone to the Russell Group universities. Where have they gone? They have gone to the old polytechnics and places like that. They deserve recognition for that, both in an accountability framework and in money.

The real problem with the report is that it has almost gone further than we expected. Its roots were to solve the problem of the previous Government having to put in a cheque before they were allowed to raise the fees above £3,000, or whatever inflation has made it. However, it has opened up a debate about the nature and shape of higher education. I welcome that, but I wonder whether, as a Government, a nation and a Parliament, we have taken on board and clearly understood that what we are about to decide is not only the level to which fees should be allowed to rise but what the shape of further education might be over the next 10 or 20 years.

For me, the higher education agenda is about world-class research, widening access, knowledge transfer, regional strength and development, and social mobility. It is also about links with further education and schools. Further education, which is responsible for the education of more than 30 per cent of our people, has not had a mention today. All these sectors need to be incentivised and rewarded if they are to survive. My worry is that the report does not do that. As we consider this issue and go forward on it, I would welcome the coalition Government seeking to widen the debate to ensure that we get all these issues right.