Higher Education: Funding

Baroness Williams of Trafford Excerpts

Thursday 8th January 2015 Lords Chamber

[Lord Stevenson of Balmacara]

To ask Her Majesty’s Government what assessment they have made of the long-term sustainability of higher education funding in the United Kingdom.

[Baroness Williams of Trafford (Con)]

My Lords, participation in higher education has huge benefits for both student and state, and that is why the English higher education funding system shares the cost of study. The system of grants and government-subsidised student loans, which are based on income-contingent repayment, has enabled us to maintain student numbers, and universities now have a sustainable income stream. In 2014, we have had record participation rates both for 18 year-olds and for disadvantaged students.

[Lord Stevenson of Balmacara (Lab)]

I thank the Minister for that full reply. I thought that she would simply refer me to the Answer that she gave on 15 December to a very similar Question from her noble friend the noble Lord, Lord Sharkey. I have read the OECD report that she quoted on that occasion—in fact, she quoted it three times—to support her assertion that the coalition Government have a sustainable system of higher education funding. On page 261 of that report, the OECD notes:

“Since 2009, further changes have been made to tuition fees and public support systems”,

in the United Kingdom.

“However, the data presented here … do not reflect these more recent changes”.

In other words, since the tripling of university fees, the elimination of HEFCE’s teaching grant and the introduction of punitive interest rates for student loans, the OECD has actually made no statement about the sustainability or otherwise of the coalition Government’s present HE funding system, and it is surely disingenuous of Ministers to assert otherwise. In the light of this, would the Minister confirm that her quote was taken out of context from the OECD report, apologise for misleading this House and withdraw the comments that she made on behalf of the Government on 15 December?

[Baroness Williams of Trafford]

My Lords, to say that a Minister is misleading the House is quite a strong thing to say and should definitely be backed up by facts. I refer the noble Lord to a comment by Andreas Schleicher, the OECD’s director for education and skills, two days ago in an article, where he said that,

“the UK offers still the most scalable and sustainable approach to university finance”.

I wonder whether the noble Lord might in fact withdraw his comments.

[Baroness Sharp of Guildford (LD)]

My Lords, I declare an interest as a member of the Higher Education Commission, which questioned the sustainability of the system. Is the Minister aware that the IFS now reckons that, at £44,000, the average debt of UK students is higher than that of students in the United States? Is it really right that a teacher aged 35 should be unable to obtain a mortgage because of the student debt that they still owe? The typical average teacher is likely to be unable to pay off that debt throughout their career.

[Baroness Williams of Trafford]

My Lords, the way in which the repayment system is structured means that no student, when they complete their studies, should ever be at a financial disadvantage. No graduate has to pay back their loan until they achieve an earning of £21,000 a year. There should not be any fear of an inability to pay back for the postgraduate student.

[Lord Morgan (Lab)]

My Lords, is there not a serious imbalance in university funding in terms of research, which has not been covered so far? The biblical precept has been followed of “To him who hath, more”—much more—“shall be given”. The effect is that only a small number of large, highly endowed universities are able to conduct a full research programme and be research active. Is it not seriously damaging to higher education in this country that our financing of research should be based on this inbuilt inequality?

[Baroness Williams of Trafford]

The noble Lord is absolutely right that research is fundamental both to universities and to the economic future of the country. I refer him to the Chancellor’s Autumn Statement, in which the Chancellor announced a significant amount of new money for research.

[Lord Foulkes of Cumnock (Lab)]

My Lords, the Minister’s reply implies that the system of university funding is the same throughout the United Kingdom. That is clearly not the case: there is an entirely different system in Scotland. Would she consider the UK Government and the Scottish Government setting up a joint investigation into the cost-effectiveness of both systems and reporting to both Parliaments?

[Baroness Williams of Trafford]

My Lords, that is possibly a matter for the devolved Administrations to decide.

[Lord Sutherland of Houndwood (CB)]

My Lords, since the changes in the funding of universities have taken place, one of the problems which has come to the surface is the funding of postgraduate students. That is because undergraduates graduate and leave with a fairly large debt, which makes them unready, unwilling and perhaps unable to fund further postgraduate work. Will the noble Baroness go back to the department and look at how we can deal with this?

[Baroness Williams of Trafford]

My Lords, the noble Lord may be aware that the Chancellor recently announced that, from 2016, postgraduate students will be able to get a loan of up to £10,000 for their studies.

[Lord Elystan-Morgan (CB)]

My Lords, is it not the case that Her Majesty’s Government have made an assessment of what proportion of student loans are likely to be recoverable? Will the noble Baroness tell the House what that figure is?

[Baroness Williams of Trafford]

My Lords, that figure varies—I think that my noble friend is referring to the RAB charge—because of macroeconomic factors such as earning potential and, therefore, the ability to repay. It is currently estimated to be around 45%.

[Baroness Walmsley (LD)]

My Lords, how many mortgage lenders are taking student loans into account when considering applications for mortgages?

--- Later in debate ---

[Baroness Williams of Trafford]

I do not know the answer to that question but am very happy to write to my noble friend.

[Lord Winston (Lab)]

My Lords, I was astounded to hear the Minister suggest that research in universities is properly funded when in fact they have laboured because the research councils have supported flat cash for the last five years, so there has been no adjustment at all for inflation. That has had a very serious effect on all aspects of research, including postgraduate education.

[Baroness Williams of Trafford]

My Lords, the point I made was that the Chancellor announced a significant amount of funding for research in the Autumn Statement.