Higher Education (Student Finance and Skills Shortages)

Lia Nici Excerpts

1st reading
Tuesday 27th February 2024 Commons Chamber

[Lia Nici (Great Grimsby) (Con)]

I beg to move,

That leave be given to bring in a Bill to require the Secretary of State to publish proposals for a scheme in which graduates of specified university courses may be exempt from requirements to repay a student loan, in full or in part, provided that they are employed in the United Kingdom in a relevant sector for a minimum time period; and for connected purposes.

With your permission, Madam Deputy Speaker, before I start, I would like to take the opportunity to echo Mr Speaker’s condolences to family and friends on the passing of Lord Patrick Cormack. He was in this place for 40 years and was born in Great Grimsby, my constituency.

It is my belief that good-quality legislation aimed at educational reform should not only encourage rising levels of attainment in both education and skills, but be designed to develop the workforce of the future. There have been numerous skills gap and skills mismatch reports over the past few years, and the path is clear for us to review how higher education—particularly undergraduate and postgraduate funding polices—can ensure that the Government provide excellent public services in the UK that help to keep the country healthy, improve productivity and grow the economy.

Before I became an MP, I worked in further and higher education for 22 years, and I believe that I have an insight into what motivates students to study to degree level and beyond. In my opinion, in too many cases, the current funding regime encourages people to study at degree level when it is not suited to the student’s skills and abilities or future career path. That is because we live with the effects of new Labour’s higher educational reforms and, in particular, the way that the student loan system works.

The policy of increasing the percentage of people who go to university, regardless of what they study, has led to a huge growth in poor-quality degrees that have little academic rigour; the loss of excellent vocational higher education courses, such as higher national diplomas, which were directly relevant to the sectors they were aimed at; and a graduate skills mismatch in the UK that is now so large that we import thousands of graduates from abroad, which means that other countries lose their highly skilled graduates to the UK. In addition, if a UK graduate emigrates, we lose any taxpayer benefit from funding their course or receiving their outstanding student fees. The Learning and Work Institute has indicated that the UK skills shortage will cost the country £120 billion by 2030, and that there will be a shortfall of appropriately 2.5 million skilled workers in our economy.

The annual cost to the Treasury of funding undergraduate and postgraduate courses in England alone is estimated at £20 billion. Graduates are expected to start paying a proportion of their tuition fees and maintenance grants, which are means-tested, only once they earn an annual income over a threshold that ranges between £21,000 and £27,660. We need a new student loan system that will incentivise students to study the degrees that we need, rather than a proliferation of degrees that do not give the country or the individual any added value and also delay that individual’s entry into a productive career.

Research findings from the Institute for Fiscal Studies and MoneySuperMarket show that UK student debt amounts to more than £100 billion, and is projected to hit £1.2 trillion by 2049. Currently only 27% of all graduates pay back their student loans in full, and 83% are projected never to do so. The IFS also estimates that 20% of students would have been better off if they had not gone to university, which proves that their degree does not add value to their career. The Open University’s 2023 “Business Barometer” report showed that despite our having a larger graduate workforce than ever before, 83% of large organisations face a skills shortage in their workforce.

Moreover, 2023 data from the British Medical Association suggests that 7% of doctors who train for employment in the NHS leave after completing their foundation years. That means a loss of £220,000 per student doctor, costing the taxpayer £146 million a year. The Government offer bursaries for doctors and dentists in the final years of their studies to help them with tuition fees and living costs, but at that stage they are already earning a wage. This is a back-to-front funding model that does not help us to recruit doctors and dentists to the NHS and maintain them there. There are also gaps in a wide range of other public sector services. Our local authorities, for instance, lack social workers, speech and language therapists and physiotherapists.

Let me suggest a solution. I should like the Secretary of State for Education to investigate the possibility of introducing what I am calling the British GradForce agreement. The model would be similar to a system that has worked well for decades in the armed forces: candidates can apply for scholarships and bursaries funded by the relevant armed force, on the understanding that they will then complete a minimum term in order to pay back to the country, in years of service, the investment that the taxpayer has made in them. Candidates who drop out or are removed before the end of that period are generally expected to pay back not only the bursary but their training costs. The system benefits capable and committed students from more disadvantaged backgrounds, rewarding them with no debt in return for their public service.

The Government should use their published skills shortage research to create a public sector graduate skills shortage list, so that public sector employers could accredit courses that are directly linked to skills shortages in particular roles. The courses would need to meet the quality thresholds required by organisations such as the Quality Assurance Agency for Higher Education and professional bodies. Universities running those courses could then apply for them to be accredited by the Government, making them eligible for the British GradForce agreement funding policy. Students applying for and then starting to study on the relevant courses could opt to sign an agreement, in which they commit themselves to completing their studies to the required employment standards, and to working in the relevant sector for the specified timescale appropriate to their course. In return for that service commitment, the Government could choose to write off their student loan fees, up to a maximum amount, over the specified length of service in that profession.

We need a policy that incentivises students to choose the degrees that the country needs by differentiating the funding model for those degrees from those for all other types of degree. The changes I am proposing could have a positive and pivotal effect on the higher education sector. They could encourage students to choose the courses that the country needs, reduce the debt burden of those students, be a better deal for the taxpayer, and help to improve growth and productivity. I hope that the Secretary of State can investigate the possibility of such a policy.

Question put and agreed to.

Ordered,

That Lia Nici, Sally Ann Hart, Tom Hunt, Miriam Cates and Martin Vickers present the Bill.

Lia Nici accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 19 April, and to be printed (Bill 168).