Funding Higher Education

Debate between Gary Streeter and Paul Blomfield

Wednesday 28th February 2018 Westminster Hall

[Mr Gary Streeter (South West Devon) (Con)]

I beg to move,

That this House has considered funding for higher education.

It is a pleasure to serve under your chairmanship, Mr Hosie, in a debate that I suspect has been slightly snow-affected. No doubt my hon. Friend the Member for Cannock Chase (Amanda Milling), who is standing in for the Minister, will say more about that in a moment. Also, I would like to thank Mr Barnaby Austin, who is a fine young man who is with me for three months. He has helped me to prepare my remarks today, so my thanks to him.

Like many Members, among my constituency duties I particularly enjoy interacting with sixth-formers in schools in my constituency, and I always feel encouraged coming away from those encounters. Not that everyone necessarily supports everything that the Government say or do, but I always feel encouraged that the coming generation is as bright, motivated and impressive as any has ever been. Looking forward, I feel that the country is in very safe hands.

Inevitably, as I am sure we have all experienced, the issue of student finance, student loans and tuition fees come up in those sessions. I have always been very happy over the last 10 years or so to support the system that we have, explaining that it is a generous system that does the job, that no one has to pay fees in advance and that it does not preclude anyone from going on to higher education. I am very happy to support the funding model that we have and always make the point that education is the best investment that any young person will ever make. A show of hands normally demonstrates pretty clearly that no one is ever deterred—or very few are—from accessing higher education as a result.

However, in the last few months I have been less sure about the fairness of the current arrangements and have been looking into some of the statistics on student finance. Therefore, I applied for this debate, to put on record a few concerns that I have and some thoughts about the future. I was both delighted and surprised that, after I had applied for this debate but before it was granted, the Prime Minister herself—perhaps picking up on my thoughts, leading wherever I go—has now announced her own review of student finance, which I greatly welcome. In particular, I support the important focus in the official terms of reference of the review, which seeks to ensure

“a funding system that provides value for money and works for students and taxpayers”.

I hope that this 90-minute debate provides us with an opportunity to explore together in a hopefully thoughtful way—it is a subject that deserves a thoughtful approach—how the system might be improved. I look forward to hearing the comments from colleagues from all parts of the House—I am sure that many have greater expertise in this area than I do—in trying to find a way forward to a system that is both fair and sustainable.

The current system of student tuition fees and loans as a means of funding higher education has achieved many positives over the years, not least an increase in the number of students from lower-income backgrounds entering higher education, which has to be a good thing.

[Paul Blomfield (Sheffield Central) (Lab)]

The hon. Gentleman is making a really thoughtful contribution, and I share his hope that we can have an interesting and useful debate. On the question of providing more opportunities for people from disadvantaged homes, the top-line numbers are clear. Does he recognise that there is a problem in the way that the system is limiting choice—there is substantial evidence that those from lower-income homes are seeking to minimise their financial liability by going local—and that, to give students real choice, issues relating to fees have to be wrapped up with those relating to maintenance?

[Mr Streeter]

I do agree with that, which is one of the reasons I am speaking today. I will talk about that in a moment, because the full-on higher education experience of going away to university and growing up during those three or four years, or however long it is, is an important part of the process. As I will set out in a moment, when a young person chooses to stay local and live with their parents or parent still, to me that is not the full-on experience, which is regrettable. I agree with the hon. Gentleman: I am beginning to see the top-line figures becoming quite a barrier to a number of people. I certainly would not want to be 24 with a debt of £40,000 hanging around my neck as I entered the workplace.

That is why we are here this morning: we have to try to find a new way forward together, and I very much welcome the Government’s review. I will briefly summarise the operation of the current system—although I know that you are an expert on it, Mr Hosie—then I will point out some of the areas in which it falls short and finally present my thoughts about the way forward.

As we know, currently universities in England can charge up to £9,250 a year for undergraduate tuition, with substantial variations in some parts of the United Kingdom, such as Northern Ireland, Wales and Scotland—that is what devolution is all about. Students can apply to Student Finance Ltd for a non-means tested loan of up to £9,250 a year to cover the tuition fees, while also taking out loans to cover the cost of living while at university.

To reflect on that point for a moment, we sometimes look back to the old days of maintenance grants. I came to King’s College in London in the 1970s, between 1974 and 1977—I cannot believe it—and had a minimum grant, based on my parents’ financial circumstances. I do not want to do a Neil Kinnock, but I was the first Streeter in a thousand generations to go to university, and my parents did not really understand that they could top the grant up, so I spent my three years in London with not very much money. It was still a wonderful experience, but it was not all gold in the old days, depending on people’s circumstances. I hope my parents never get to read the Hansard report of this debate, because they are wonderful people.

--- Later in debate ---

[Mr Streeter]

I agree that people who are not able to draw down on the bank of mum and dad have a much tougher time. The figures I am quoting presuppose that someone has taken out loans for tuition fees and support. I think they are the maximum figures. I think the point that the hon. Lady and I would agree on is that there are students who do not rack up that kind of debt because they get support. Once again, there is an issue of fairness for students from disadvantaged backgrounds.

That debt is certainly a hindrance to getting on the housing ladder, to which 85% of young people aspire. It is something that the Government are desperate to encourage. If we are to meet the aspirations of generation rent, we might have to remove some of the burden from their backs. The prospect of having such a large debt hanging over their heads inevitably leads to some mental health worries among higher education students and graduates. In 2015, a study published in the Journal of Public Health, entitled “The impact of tuition fees amount on mental health over time in British students”, found that in the UK,

“poor mental health in students has been linked to financial problems, considering dropping out for financial reasons, financial concern, being in debt and concern about debt.”

It is worth noting that countries such as Sweden, Denmark, Finland and, more recently, Germany have moved away from the tuition fee model.

There are big questions about whether universities provide proper value for money for their degrees and offer favourable returns for graduates. The National Audit Office reported that two thirds of students consider that universities do not provide decent value for money. More students—especially those from poorer backgrounds, to come back to the point we were debating a few moments ago—are choosing to stay at home and attend their local university due to fears over unsustainable debt. That is a regrettable trend, because the whole university experience is partly about moving away from home for the first time, growing up and learning independence.

[Paul Blomfield]

I clearly agree with the hon. Gentleman on his point about the wider university experience, but does he recognise that staying at home narrows academic choice, depending on where someone lives? If people are choosing local, that might give those in London an immense range of opportunities, but in many parts of the country it narrows the choice significantly.

[Mr Streeter]

That is a good point. I represent the city of Plymouth. We have an excellent university, but it is particularly strong in certain fields. If someone is minded to stay local because of cost and debt and they want to become—I had better choose my subject carefully, because I do not want to diss any of its faculties, which are all excellent—a top-notch lawyer, they might not want to choose Plymouth. They might prefer Exeter. I think I have got myself into trouble here. I thank the hon. Gentleman for leading me down that path. Plymouth is an excellent university for all subjects, but he makes a compelling point.

Moving on, what might we do? We are right to ensure that students contribute. We want universities to be properly funded, but how can we make the system fairer and more sustainable? I have welcomed the excellently timed Government review, and I very much look forward to the outcome.

Universities could do more to reduce their costs. They are slightly strange organisations. In one sense, they are neither private sector nor public sector. They are a hybrid and in many ways they are perhaps unaccountable. The salaries of vice-chancellors is just one issue—acting on them would not have a huge impact, but would be emblematic. At the University of Bath the vice-chancellor’s salary is £471,000, at the London Business School it is £448,000, and at the University of Southampton it is £424,000. How can the leader of a university earn three times more than the Prime Minister of this country? I do not understand that, and it has to be tackled. It is a bit like people wagging their fingers at us and saying, “MPs all earn so much money.” Having proper oversight of vice-chancellor salaries would not save much money, but it would send a signal, bearing in mind that students contribute 50% of the cost of those salaries. The salaries are utterly outrageous and something needs to be done. Perhaps the Minister will touch on that when he winds up.

[Paul Blomfield]

Will the hon. Gentleman give way?

[Mr Streeter]

Yes, I enjoy giving way.

--- Later in debate ---

[Paul Blomfield]

Given the numbers here today, there is an opportunity to have a good interactive discussion. I will try not to lead the hon. Gentleman into difficult territory with this intervention. He is absolutely right about vice-chancellors’ pay. The sector has got it wrong, and in some cases spectacularly. Does he accept that the problem is that people have said to universities, “Behave like the big businesses you are”, and are then complaining when they do? Does he think we should have the same approach to unacceptably high pay in all parts of the private and public sectors?

[Mr Streeter]

If an individual sets up their own business and still owns it then it is up to them what they pay themselves, but other than that I tend to agree about large salaries at the top justified by being in a marketplace and having to compete with other organisations. The charitable sector is another one where we have seen massive chief executive officer salaries. I imagine that if many people knocking on doors raising money for charities really knew what was going on, they would not be so happy. There is a job to be done in all these sectors, perhaps sparked by the Government, to have more reasonable levels of pay at the very top. The gap to those at the top must be very dispiriting for those humbly working day in, day out for not very much money. I recognise that we need to do more about that. The Government have talked about it, and I support them.

I have three specific proposals before I sit down. There are two quick ones, and one where I will go into greater depth.