Queen’s Speech

Baroness Warwick of Undercliffe Excerpts

Tuesday 15th May 2012 Lords Chamber

[Baroness Warwick of Undercliffe]

My Lords, I will focus my brief remarks on those elements of the Government’s programme that relate to higher education. What is most striking is that there is so much missing. Last year’s Students at the Heart of the System White Paper promised us a higher education Bill in this Session. That has not materialised, although the Government have said that we may see a draft Bill in the new year.

My first anxiety centres on funding. In the 2010 spending review, the average cut in departmental expenditure was 11.7%. BIS did considerably worse than the average, suffering a 29% cut. In 2012-13, that translated into an 18% cut in recurrent funding to HEIs. For most institutions, this will be more than offset by the increase in income from tuition fees, but this year’s Budget made it clear that there are further cuts to come. Departmental budgets will be cut by an average of 3.8% a year between 2015 and 2017. Therefore, it seems inevitable that the cuts will need to be bigger than they were last time. However, the political climate is much more difficult now. Those cuts that might be regarded as having been more straightforward have already been made. The question for universities is whether BIS will again face a larger-than-average cut and, if so, how that will translate into university finances.

The proportion of university funds that comes from the state will fall to around 40% following the shift to higher fees this September. Nevertheless, universities are still highly dependent on public funding for research, as well as for supporting high-cost subjects and activities such as widening participation. If university budgets were to be targeted for hasher cuts in the next spending round, what else could be cut? The research budget and the all-important science ring-fence that protects it could start to look vulnerable. Universities can make an excellent case that cutting back on research that drives innovation and inward investment in the UK is economically suicidal. Universities are essential to the Government’s core purpose of—in the words of the noble Lord, Lord McNally, in opening this debate—“sustainable recovery”. Therefore, I look to the Minister’s reply for reassurance on the Government’s commitment to research funding.

My second anxiety is about the impact of student numbers in the private sector. This matters because at the moment a growing number of private higher education providers have access to public funds via student loans but remain largely unregulated. These private providers will not be subject to the £9,000 fee cap, financial scrutiny by the Higher Education Funding Council or, for example, oversight by the Office of the Independent Adjudicator. From September, students at such institutions will be able to access loans of up to £6,000 if their course is one of those that has been designated—to use the jargon—for student support. I have no objection to this. However, I note that because of the delayed introduction of the higher education Bill, the Government will not be able to control the student numbers on such courses.

Those numbers are, at present, relatively small; there were around 6,000 full-time students in 2009. However, applications are growing rapidly, partly because of constraints on student numbers in the publicly funded part of the sector. We do not know a great deal about enrolment in private providers because they do not provide data to HESA, but it is known that the Government spent around £33 million on loans to students in these institutions in 2010-11. With the maximum loan to students at these institutions almost doubling to £6,000 in September, we know that expenditure will increase to somewhere in the region of £100 million without factoring in any significant expansion.

I fear that, in the absence of the higher education Bill, there will be no means of either controlling costs or protecting student interests. For that reason alone, the Government should act swiftly, either to impose a moratorium on the designation of courses for student support or to enable those measures that are necessary to bring private providers into line with other institutions. In his reply, will the Minister tell me how the Government propose to control expenditure on loans to students at private institutions, given that they cannot control numbers?

Finally, I should briefly like to mention the communications Bill, which we are told to expect in draft next year. This Bill would, among other things, implement the recommendations of the Hargreaves review and introduce new copyright exceptions for research activity, such as text and data mining. That is important because our copyright regime currently prevents academics from making use of technology to search and compare published research. Many of our competitors in other countries do not face the same restrictions, which places the UK at a distinct disadvantage. Freeing researchers to use the potential of this technology will, I believe, deliver real benefits to UK research. Hargreaves’s proposals were entirely sensible. I welcome the fact that the Government have agreed to adopt them and I look forward to the relevant legislation being introduced.