Skills and Post-16 Education Bill [HL]

Baroness Sherlock Excerpts

Committee stage
Wednesday 21st July 2021 Lords Chamber

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, I must first apologise for my absence from this Committee on Monday, particularly to the noble Baroness, Lady Sherlock, and the noble Lord, Lord Watson of Invergowrie, whose amendments I had signed. It was entirely due to an administrative foul-up on my part.

I speak today in support of the amendment in the name of the noble Lord, Lord Willetts, which in some ways reflects what is happening now in an ad hoc way. Back in 2018, Philip Augar was asked to review what was happening with student fees. In January, we had an interim response from the Government on that, but, according to the Guardian at the start of this month, we are going to get the Government’s full response soon—we are looking at a four or five-year time period, the same as is proposed in this amendment.

What we are hearing about the debate going on behind the scenes before we get that response is talk of tuition fee cuts, a cap on student numbers for certain courses and minimum qualifications, which are all designed to lower the cost to the Government of financing the student loan system. The fact is that, when tuition fees were set at £9,000 in 2012, the intention was to have inflationary increases at regular intervals. But since being raised to £9,250 in 2016, the fees have remained at that level while the real value has declined by 12%. It is notable in this context, as the noble Lord, Lord Willetts, said, that this is an intensely political issue and decisions are very likely to be made in an ad hoc, highly political way.

It is interesting that apparently the report suggests that the Treasury is seeking to directly cut fees and increase repayments, while other parts of government favour more indirect means, such as minimum entry requirements and course caps. We really have to think about that latter approach in the context of the Bill we are debating now; it is focused on the need for more skills and education, yet we are expecting sometime soon a proposal from the Government that will squeeze down and reduce people’s access.

We have to look at where we are: more than £17 billion is being loaned to students each year. The value of outstanding loans has reached £160 billion, and this is expected to be £560 billion by the middle of this century, at 2020 prices. Some 75% of students will not repay their loans. That means half the people in a single generation going through life for 30 years with that weight resting on their shoulders. We are in a situation now where we are stressing the need for this review. Think about Covid; it descended on us and society changed enormously, and in this age of shocks, we do not know what changes will arrive in future.

The noble Lord, Lord Willetts, reflected that the Government would probably not welcome this amendment, because the issue of fees is so difficult and controversial. However, I agree with the noble Lord that this magnifies the need for a systematic, planned, guaranteed measure of review. We could even argue that it would make it easier for Ministers, because by being on the face of the Bill, it would be a review that had to happen, and it would be set in the government timetable.

The practical reality is that what we have now is a fantasy. These are called loans, but most of the money will never be paid back. We as a society need to reflect on the fact that education is a public good, and it should be paid for from general progressive taxation, not weighted on to the shoulders of individuals, in a system whereby those who earn the most can, by paying off their loans fast, repay the least. We need change. The amendment will not achieve that, but it would at least create a pause, a chance to think—indeed, a requirement to think—about what we are doing to our young people and their future.

[Baroness Sherlock (Lab) [V]]

My Lords, I thank the noble Lord, Lord Willetts, for introducing his amendment, and the noble Baroness, Lady Bennett, for her reflections—and for her courteous but quite unnecessary apology. The current arrangements for student loans are now quite complicated. A recent House of Commons Library brief gave a lovely timeline of all the changes from 1990, when the first loans were introduced for student support—then at just £420 a year. It then tracked the developments, as loans gradually replaced grants for maintenance, and there was a shift from mortgage-style loans to income-contingent repayment schemes. Then loans for fees started, and some maintenance grants came back.

The big shift came in 2012, when fees trebled and the current system was in put in place. The effect of this pattern showed up when I was chatting recently to a member of our small opposition staff team. She had compared notes with a couple of colleagues in the office, and realised that although the three of them had graduated not so many years apart, each had a different package of debt and repayments.

Part of the reason for the complexity is that the system has so many moving parts. A Government wanting to save money have a range of ways to do it. They can change the size of the original debt, as they did dramatically in 2012. They can change the repayment threshold, as they did in 2016, when they decided to stop tracking earnings and freeze the threshold until 2021—although that went down so badly that they changed it again, not just unfreezing the threshold but raising it to £25,000 from 2018. They can change the contribution period; indeed, Augar recommends raising it to 40 years. They can change the contribution rate. That is still 9% for undergraduate degrees, but loans for master’s programmes were introduced in 2016, and for PhDs in 2018. That rate could now go up to 15% of earnings above the threshold for postgrads. Or they could change the interest rates. Indeed, they are spoilt for choice here: they could change the rate while studying or the rate when repaying, or they could change one or both of the lower and upper thresholds. Each of those changes or combinations would have a different distributional effect.

I take it from his introduction that the noble Lord, Lord Willetts, wants a periodic systematic review, and he made his case for that. But does his amendment mean that changes could be made only then? I suspect that the answer to that might affect the Government’s interest in the idea.

One benefit of the systematic approach would be the opportunity to ensure that factual information about the impact of changes to the system was gathered and disseminated. Does the Minister agree that work is needed to ensure that the student loans system is widely understood? After all, if Governments are to make changes to student finance, it is vital that it is not done by sleight of hand, or by banking on the HE version of a fiscal drag. It is crucial that the differential impact on people with different likely lifetime earnings is made crystal clear. After all, if the state is advancing £17 billion a year to higher education students in England and the value of outstanding loans is some £160 billion this year, the least the Government owe the country is transparency, and a good public debate. Does the Minister agree?

[The Parliamentary Under-Secretary of State, Department for Education and Department for International Trade (Baroness Berridge) (Con)]

My Lords, I am grateful for the amendment tabled by my noble friend Lord Willetts, and for his thanks. It is a pleasure to engage with noble Lords. This is my first piece of legislation in your Lordships’ House, and I hope that this is the shape of things to come in terms of the tone and the reaction to this legislation.

With £19.1 billion paid out in student loans in the financial year 2020-21, and further increases forecast for future years, it is essential that the Government keep careful control of the student finance system. It is also important that they retain the ability to review and make changes to the student finance system as and when needed, without the potential delays, or the focus on process, that a requirement for a review every five years could impose. I appreciate my noble friend’s comments, but inadvertently, a process may, as the noble Baroness, Lady Sherlock, outlined, become constraining, even if it was introduced with the best of intentions.

We must ensure that the system can remain responsive to the needs of the labour market and the wider economy, and thus continue to deliver good value for students and the taxpayer. We agree that, as the noble Baroness said, there is a need for transparency. A wide range of data on student loans and repayments are regularly produced and made publicly available, which enables the Government, and other interested parties, to monitor the student loans system. These include regular publications from the Student Loans Company and the Higher Education Statistics Agency.

As the noble Baroness, Lady Sherlock, outlined, the Government have updated the student loan offer in recent years, with the introduction of several new loan products, including loans to support postgraduate and doctoral study, and we will continue to make changes as and when necessary. Through the Bill, the Government are also introducing a lifelong loan entitlement that will open up new routes for people to retrain and upskill flexibly throughout their lives.

In relation to some of the questions raised by the noble Baroness, Lady Bennett, the fees cap of £9,250 is frozen for this year and the next academic year. She talked about the burden, and the responsibility, obviously, is to repay a loan, but 30 years is at the moment akin to many of the mortgage products available on the commercial market.

As the noble Lord, Lord Willetts, correctly predicted, I shall take this opportunity to remind noble Lords of the recommendations regarding higher education, including on student loans and graduate repayments, that were made by the independent panel appointed to provide input to the review of post-18 education and funding. The Government are carefully considering these recommendations before setting out a response to the review, along with the comprehensive spending review.

In conclusion, while I am sorry to disappoint my noble friend for the second time in recent days, I hope that my remarks have reassured him, as I know this has been an issue of concern to him for many years. I hope that he will feel comfortable in withdrawing his amendment.

--- Later in debate ---

[Baroness Bennett of Manor Castle (GP) [V]]

My Lords, it is a great pleasure to follow the noble Baroness, Lady Greengross. This group of amendments has already been outlined clearly by the right reverend Prelate the Bishop of Durham. To sum up his contribution, he asked how people could better use their time while unemployed than by upskilling. The noble Lord, Lord Addington, said that it would be an absurdity not to encourage the unemployed to improve their skills.

On day one of our debates, we talked a great deal about the need, in our climate emergency and nature crisis, to increase our skills. There is simply so much that we need. People who are unemployed are obviously at a potential point where we can start to fill some of those gaps.

The noble Baroness, Lady Janke, made an important point: that unemployed people are of all ages, from those just leaving school to those in their 70s and beyond who still need, or want, to work. They often have commitments, for example to children, to rent, to a mortgage or to supporting older relatives. We cannot assume that they are just a unit of labour that can be shifted around at will.

What we have seen is decades of wretched economic change in many parts of the country, which has only been amplified by Covid. It is worth looking at a study from the Institute for Employment Studies, published in June. It attempts to explain the current conundrum where we have a recruitment crisis yet in parts of the country there are as many as 10 jobseekers for each vacancy. According to the study, the average number of people across the country claiming unemployment benefit and competing for each vacancy is 2.2, and almost 100 local authorities have five jobseekers going for each available role.

People have to be able to make choices in their own interests and in the interests of the country. Leaving people trapped, applying—pointlessly, they know—for scores and scores of jobs that they know they are not going to get is profoundly dispiriting and damaging. We need to give people the option of finding another path forward in life instead of being trapped in that situation.

[Baroness Sherlock (Lab) [V]]

My Lords, I am grateful to all noble Lords who have spoken to air these important issues.

The right reverend Prelate the Bishop of Durham identified some of the major barriers placed in the way of people who want to take up education and training to improve their skills. Did the Minister see the recent report from the Association of Colleges? It concluded that the current social security rules

“actively discourage people from getting the skills they need”—

a point reinforced by the noble Baroness, Lady Greengross. The report argues that, if this is not fixed, it will result in

“fewer people in stable and meaningful jobs … slower economic growth … reduced opportunity to meet employers’ skills needs; and … bigger tax burdens.”

It is crucial that government policy is joined up, with skills, employment and social security policy properly aligned. Indeed, as the noble Baroness, Lady Bennett, pointed out, all these must be aligned with our overriding plans to deal with the climate emergency. Amendment 98 in my name is designed to probe whether the Government have any plans to do this, in terms of alignment, by changing the rules on universal credit to support skills development.

Most people who are studying full-time cannot get universal credit. There are exceptions, such as for young people who are doing A-levels or other non-advanced courses and do not have parental support, for those who are responsible for children and for some disabled people with a limited capacity for work. Otherwise, people on UC face the kind of conditionality requirements mentioned by the right reverend Prelate, the noble Baroness, Lady Janke, and others. Specifically, unless they have an easement of some kind, UC claimants are meant to spend 35 hours a week looking for work, and to provide evidence. This can result in some pretty dispiriting things of the kind mentioned by the noble Baroness, Lady Bennett. The claimants are allowed to do part-time education or training, but only if they can fit it in in their spare time—in other words, fit it in around a full week’s job search.

--- Later in debate ---

[Lord Aberdare (CB)]

My Lords, this broad group covers many of the crucial features of the lifelong learning entitlement. I will confine my remarks to Amendments 92 and 95, covering the availability of the entitlement and learners’ eligibility for it. The lifelong loan entitlement and the lifetime skills guarantee are absolutely at the heart of this Bill and the framework it seeks to create. To achieve the more highly skilled, productive and ambitious nation that we seek, people—not just some people, but all people—need to know that there are great opportunities available to them, whether they desire new skills, higher skills or refreshed skills, and they need to know how to find out how to pursue them. That is where careers information and guidance come in and why they need to be properly covered in the Bill.

People also need to know that the training and educational routes to acquiring the skills to grasp those opportunities are realistically open to them, without undue or unreasonable restrictions or conditions. That is what will generate the enthusiasm and the actual take-up, so that the skills policy and the ambitions behind the Bill achieve the outcomes they deserve. Both the right reverend Prelate the Bishop of Durham and the noble Lord, Lord Addington, have mentioned incentivising learners to encourage them to take part, which may not need to be in the Bill itself but needs to be a central part of the strategy.

If I have always nursed the desire to retrain as a bookbinder—or perhaps as a graphic designer, as in the example of the noble Lord, Lord Johnson, also a classicist—but I find that loans are available only for specific skills not including bookbinding, or that they do not apply to my age group, or do not include any allowance for living expenses I might need, or are not available to me because I already have an equivalent-level qualification, or are ruled out for other reasons, I may well decide to drop the whole idea as an unrealisable or impractical aspiration. If I get the impression from the outset that there are likely to be such barriers or limitations to accessing the entitlement, I will probably not pursue it at all. But if the lifelong loan entitlement actually means what it says, it could unleash a wave of energy and creativity, as people embrace it to expand their skills and pursue their goals—and indeed their dreams. The suggestion of noble Lord, Lord Johnson, of a proper economic assessment, with that in mind, of the ELQ requirement and the limitations on creative and arts funding, would be very welcome.

The lifelong loan entitlement and the lifetime skills guarantee—LLE and LSG—should be the twin banners for a skills revolution, or a skills crusade, not just sets of rules, regulations and legislation setting limits on training availability. So I enthusiastically endorse Amendment 92 in the names of the noble Lord, Lord Johnson, and the noble Baroness, Lady Garden, and the somewhat similar Amendment 95 in the names of the noble Lord, Lord Watson, the noble Baroness, Lady Bennett, and, again, the noble Baroness, Lady Garden, in their aims to establish a truly all-embracing and inspiring entitlement with a minimum of limitations, driven, above all, by learner aspiration, enthusiasm and desire. The LLE and the LSG together offer a real chance to make education and skills exciting and exhilarating, as they should be. I hope the Government will take that chance, even if not by accepting these amendments.

I wish the Government every success in making progress with this important Bill and with the strategy underlying it. Since this will be my last contribution in Committee, I would like to commend both Ministers—the noble Baronesses, Lady Berridge and Lady Penn—on their contribution to this Committee. I wish them an enjoyable and, I hope, restful—though possibly not, in the case of the noble Baroness, Lady Penn—and very happy recess before we get to grips with the Bill again.

[Baroness Sherlock (Lab) [V]]

My Lords, we have had some really interesting speeches in this group already, but I am afraid that this is the end of that trend. I am merely going to talk about the government amendments, and my noble friend Lord Watson will cover the interesting bits at the end.

They government amendments represent some of the wiring in the basement of higher education that are going to be needed when the Government unveil their renovation plans in the form of the detail of the lifelong loan entitlement. The Minister moved the government amendments in just over two minutes. I want to unpack them a little, so we can understand their potential implications. I confess I may have a suspicious nature, although I am encouraged, having heard the contribution from the noble Lord, Lord Johnson, that I am not alone in that.

Currently, the different bits of legislation that frame the regulation and funding of higher education are predicated on the unit of education being a course made up of academic years. The Teaching and Higher Education Act 1998—THEA—governs which HE courses attract funding via the student loan system, by referring to the Education Reform Act 1988, while HERA governs which bits of HE are regulated by the Office for Students and are subject to fee limits and more besides. But of course the lifelong loan entitlement is intended to cover not just university degree courses but courses and modules in further and higher education. To make that possible, Clauses 14 amends the regulation-making powers in THEA to allow for the funding of courses in FE and modules in FE and HE, to set a lifetime funding limit, and to allow for funding based not only on the academic year.

The Minister explained that Clause 15 amends the definition of a higher education course in HERA to make it clear that the regulatory regime applies to modules of courses. The way it does that is to say that an HE course is either a course mentioned in Schedule 6 to the Education Reform Act 1988 or a module of such a course, whether or not undertaken as part of such a course. So a course is either a course or a part of a course—I confess I wrestled for a bit with whether a thing could be itself or part of itself. But then government Amendment 91C now distinguishes between a full course and a module for the purposes of HERA. A full course means a higher education course that is not a module of another higher education course. A module is a module of a full course, but which is undertaken otherwise than as part of those courses.

I know, on the face of it, that that sounds like a circular definition, but I have decided the only way I can understand it is as a set of Russian dolls: a smaller Russian doll counts as a module if she fits inside a bigger one and is a part of that set; an identical Russian doll that is not part of a set at all would not be a module; and a full course is the biggest Russian doll which does not fit inside any other Russian doll. I am grateful to the Minister for giving me access to some very clever and kind officials to help me try to understand this regulation—although I should say that their language was rather more precise, and there was no mention of dolls. I hope she can tell me whether I have got that right.

Why does it matter? I think that is up to the Minister to tell us. On access to student finance, can the Minister confirm whether this means that a module can be funded only via the student loan book if it is part of a full HE course? Is it right that the student does not have to be registered for that course, or indeed any course, while taking the module? Could I, say, draw on my lifelong loan entitlement to take the “Introduction to Christian ethics” module, which is part of a theology degree at Lindchester University, without being registered for that degree, or indeed any degree? If so, that raises another question. Modular degrees generally have a limited number of pathways that can be taken through them to reach a qualification, in order to ensure there is a coherence to a degree and that certain essentials are covered. Could a student take a series of modules, each of which is part of a full course but which taken together will never add up to a full course, and therefore could never lead to a qualification?

Do the Government intend to prescribe the size or shape of a module further, either for funding or regulatory purposes? There are lots of modules around: short, intensive modules and long, less intensive modules; modules worth 10 credits and others worth 15 or 20; and modules at level 4, level 5 and level 6. Clause 14 provides that two or more modules can count as a single module—for the purposes, I presume, of student finance. Is that a hint that the Government may want to set a minimum credit value that will be eligible for support under the loan? If the centre gets too stuck into defining what a module is, does it not risk both the autonomy and, crucially, the flexibility of providers—maybe even getting in the way of the innovation the Government say they want?

There are so many more questions that need answering, about choice, compatibility, comparability, funding and lots more. I suspect the Minister will say we need to wait until she brings forward more amendments on Report, but there is one matter she needs to address today: the changes these amendments would make to the powers of the Office for Students. By switching the unit of HE from just a course to either a full course or a module, these amendments would empower Ministers at a later date to allow funding for modules. But it seems to me that they immediately allow the Office for Students to regulate at the level of a module as well as a course. Amendment 91B does place some limits on that by saying, for example, that the OfS cannot request information on modules more often than courses. It also means that the OfS is not obliged to publish information on fee limits for modules, as it is for courses.

But can the Minister tell the Committee if the effect of these amendments is that the unit of higher education can be a module for the purposes of regulation? What will that mean for the way the OfS regulates quality in higher education? Currently its key metrics are student continuation rates, completion rates and progression to managerial and professional jobs. How does that work for modules? If a student takes modules at several different providers, who is responsible for her outcome? Is it the last one she happened to stop at?